Bear Call Spread
Short Call Vertical · Credit Call Spread
Overview
A bear call spread collects premium when you expect a market to stall or drift lower. You sell a call to take in credit and buy a higher-strike call as protection against an upside gap. You keep the credit as long as price stays below the strike you sold.
The long call defines the worst case, turning call selling into a controlled-risk trade. It is the bearish counterpart of the bull put spread and profits from time passing and resistance holding.
How it’s built
Sell 1 lower-strike call (at or just out of the money) and buy 1 higher-strike call for protection, same expiry. Net credit in; the strike gap caps the loss.
| Action | Option | Strike | Premium | Role |
|---|---|---|---|---|
| Sell | Call (CE) | 24,000 | 180 | Sell — premium-collecting leg |
| Buy | Call (CE) | 24,200 | 90 | Buy — caps the upside risk |
Payoff at expiry
The diagram is computed from the legs above on an illustrative NIFTY 50 snapshot — spot 24,000, one lot of 75.
Worked example — NIFTY 50
NIFTY is at 24,000 pressing against resistance you expect to hold. You sell the 24,000 call for 180 and buy the 24,200 call for 90, banking a net credit of 90 points (₹6,750 per lot).
If NIFTY stays at or below 24,000, both calls expire worthless and you keep the full credit. Losses only start above the 24,090 breakeven and are capped at 110 points even if price rallies through 24,200.
At expiry
| If the market… | Outcome |
|---|---|
| NIFTY closes ≤ 24,000 | Full profit — keep the entire credit |
| NIFTY closes at 24,090 | Breakeven — losses cancel the credit |
| NIFTY closes ≥ 24,200 | Maximum loss — capped by the long call |
Greeks & behaviour
When to use it
- You expect a sideways-to-down market capped by a clear resistance.
- You want to be paid time decay with a defined worst case.
- Implied volatility is high and likely to soften.
Risks & caveats
- A strong breakout above resistance hits the maximum loss fast.
- Reward is limited to the credit — risk exceeds reward per trade.
- Upside gaps through both strikes lock in the full defined loss.
Key takeaways
- Get paid to back a resistance level holding.
- The long call makes call selling risk-defined.
- High win-rate, capped reward — manage size carefully.
Test this on live data
Load the Bear Call Spread preset in the Strategy Builder to see real strikes, premiums and a live payoff graph.
Educational content only — not investment advice or a recommendation. All strikes, premiums and figures are illustrative and do not reflect live market quotes. Options carry significant risk; consult a registered adviser before trading.