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Bear Call Spread

Bearish Strategy

Use Zuviz's free options visualizer to build this strategy instantly. A credit spread for bearish/neutral outlook. Sell a call and buy a higher-strike call for protection.

⚡ Key Takeaways

  • Market Outlook: Neutral to moderately bearish
  • Max Profit: Net credit received
  • Max Loss: Width of strikes - net credit
  • Breakeven: Short call strike + net credit
  • Best for: Generating income when neutral or bearish
  • Greeks Impact: Positive Theta (time decay helps), positive Delta

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Market Outlook
Bearish/Neutral
Max Profit
Net Credit
Max Loss
Width - Credit
Breakeven
Lower Strike + Credit

📊 Payoff Diagram

Open in Zuviz →

🏗️ Strategy Structure

Leg Action Type Strike Premium
1 Sell Call $100 (Lower) $3.00
2 Buy Call $105 (Higher) $1.00

Net Credit: $3.00 - $1.00 = $2.00/share ($200/contract)

Max Loss: ($105 - $100) - $2.00 = $3.00/share ($300/contract)

🧮 Key Calculations

🎯 When to Use This Strategy

  • Bearish outlook: Expect stock to stay flat or decline
  • High IV environment: More premium to collect
  • Resistance level: Stock unlikely to break above a key level
  • Time decay: Benefits from Theta as credit spread

📈 Greeks Impact

Delta (Δ)

Negative - You want the stock to fall.

Theta (Θ)

Positive for short strategies (time helps), negative for long strategies.

⚖️ Pros & Cons

Pros

  • Defined risk
  • Profits from time decay
  • Cheaper than shorting stock

Cons

  • Capped profit
  • Assignment risk on short leg
  • Multiple commissions

📝 Real-World Example

Stock: NFLX at $400. Trade: Sell $410 Call, Buy $420 Call.

Credit: $3.00. Max Profit: $300. Max Loss: $700. Breakeven: $413.

🔗 Related Strategies

📊 Bear Put Spread

Same bearish outlook, debit spread

⚠️ Short Straddle

Income from low movement

Visualize This Strategy

See the payoff diagram in Zuviz.

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