Bear Call Spread

The bear call spread — also called a short call spread or call credit spread — is a defined-risk, defined-reward options strategy that profits when a stock stays flat or declines. You sell a call at a lower strike and buy a call at a higher strike, collecting a net credit upfront. If the stock stays below your short call at expiration, you keep the entire credit as profit.

Unlike naked short calls, the long call at the higher strike caps your maximum loss, making this strategy accessible to traders at virtually all levels. It is one of the most popular premium-selling strategies in options trading.

What Is a Bear Call Spread?

A bear call spread is a two-legged vertical spread constructed entirely with call options on the same underlying asset and expiration date:

• Leg 1 (short): Sell a call option at a lower strike price
• Leg 2 (long): Buy a call option at a higher strike price

Because the call you sell (closer to the current stock price) carries more premium than the call you buy (further out of the money), you collect a net credit at entry.

Bear Call Spread Payoff Diagram

The chart below shows the P&L of a bear call spread at expiration for a trade where you sell the $100 call for $3.00 and buy the $105 call for $1.00, collecting a $2.00 net credit:

Max Profit, Max Loss, and Breakeven

Max Profit  = Net Credit = Short Call Premium − Long Call Premium
Max Loss    = (Long Strike − Short Strike) − Net Credit
Breakeven   = Short Call Strike + Net Credit

When to Use a Bear Call Spread

• Neutral-to-bearish outlook — you need the stock to stay flat or fall, not rally.
• Elevated implied volatility — high IV inflates premiums; you sell expensive options and benefit when IV contracts.
• Stock near or below resistance — place your short call at a technical resistance level the stock has failed to breach.
• 30–45 days to expiration — theta decay accelerates most in this window.

Managing a Bear Call Spread

Take profits at 50%: Close when you can buy the spread back for half what you collected. This dramatically improves long-term expectancy.

Cut losses early: Close if the spread doubles in value against you (e.g., collected $2.00 → close if spread worth $4.00).

Roll up and out: If the stock rallies toward your short strike, close the spread and reopen at higher strikes with a later expiration — but only for an additional credit.

Key Takeaways

• Bearish to neutral credit spread: sell lower-strike call, buy higher-strike call.
• Net credit = max profit. Max loss = spread width − credit.
• Profits from theta decay and falling or flat stock price.
• Enter in high-IV environments at 30–45 DTE; close at 50% profit.