Options Strategies
Bear Call Spread
Strategies Bear Call Spread
Component Sell lower strike price/level call, buy higher strike price/level call of the same month
Potential Profit
  • When the stock price/index level is below the break-even point
  • Limited to the net premium received
Maximum Loss The difference between the two strike prices/levels minus the net premium received
Time Value Impact Neutral
Break-even Lower strike price/level plus net premium received
Remarks As different from a Bear Put Spread which would result in net premium paid, a Bear Call Spread results in net premium received, as the premium for the lower strike price/level call is higher than that of the higher strike price/level call.
  Net Position -1 Jan 190 Call +1 Jan 220 Call

Component Sell ABC Jan $190 Call, receive $30, and buy ABC Jan $220 Call, pay $10
Net Premium Receive $30-$10=$20
Break-even $190+$20=$210
Profit when Stock price is below $210
Potential Profit $20
Potential Loss ($220-$190)-$20=$10
Time Value Impact Neutral