Bear Call Credit Spread
Sell a call and buy a higher-strike call on the same expiration. You collect a credit and profit if the stock stays below the short strike.
Written by the MarketWrench team. Examples are worked with the same Black-Scholes model used in our calculators (4% rate, no dividends unless stated) and are reviewed for accuracy before publishing. How we create content.
Payoff at expiration
When traders use it
You are neutral to moderately bearish and want defined risk.
Formulas (per share; ×100 per contract)
| Max profit | Net credit |
| Max loss | (Long strike − short strike) − net credit |
| Breakeven | Short strike + net credit |
Key risks
Losses are capped but often larger than the credit. A strong rally takes you to max loss quickly. The short call may be assigned early before an ex-dividend date.
How it works
Sell one call above the current price and buy one call further above it, same expiration. If the stock stays below the short strike, both expire worthless and you keep the credit.
Worked example HYPOTHETICAL
Hypothetical example only — not real prices or a recommendation. Stock at $100. Sell the 30-day $105 call for $1.66 and buy the $110 call for $0.66. Net credit $1.00 ($100). Max loss $400. Breakeven $106.
| Stock price at expiration | P/L (1 contract, excl. fees) |
|---|---|
| $90 | +$100 |
| $100 | +$100 |
| $105 | +$100 |
| $106 | $0 |
| $110 | −$400 |
| $120 | −$400 |
Market outlook: when to use it
Use when: Neutral to bearish; you expect the stock to stay below a resistance level.
Avoid when: Strong upward momentum, upcoming positive catalysts, or a short call close to an ex-dividend date.
The Greeks, in plain words
| Delta | Negative: gains as the stock falls. |
| Theta | Positive. |
| Vega | Negative. |
| Gamma | Negative near the short strike. |
Choosing strikes and expiration
Short call often 0.20–0.30 delta, 30–45 days out. Strike width sets max loss. See how to pick a strike and expiration.
Managing the trade
Take profits early (often 50% of credit). If the stock rallies through the short strike, close or roll up and out. Watch ex-dividend dates.
Common mistakes
- Selling calls on a stock in a strong uptrend.
- Ignoring dividends and early assignment risk.
- Letting a tested spread expire between the strikes.
FAQ
Why use a call spread instead of buying a put?
It profits even if the stock goes sideways, and time decay works for you, but the upside is capped.
What happens if the short call is assigned?
You become short 100 shares; your long call still caps the loss. Many traders close the whole spread.
Explained simply
You are paid $100 now and promise to sell the stock at $105. A second contract lets you buy at $110, so the worst case is a $400 loss.
Not financial advice
This page is for educational and informational purposes only. It is not financial, investment, tax, or legal advice, and it is not a recommendation to buy or sell any security or to use any strategy. All examples use hypothetical numbers. Options involve risk and are not suitable for everyone. Do your own research and consider talking to a licensed professional before trading.
Read next
Assignment and Early Exercise · Theta and Time Decay · All Learn articles
Related strategies
Bull Put Credit Spread · Bear Put Spread · Iron Condor
Watch: further explanation
Video coming soon. Our Credit spreads walkthrough is in production. Meanwhile, browse the MarketWrench YouTube channel.
Calculators for this strategy
Options Profit Calculator · Probability of Profit Calculator · Assignment Risk Checker · IV Rank Calculator