Bearish · Credit · Defined risk
Bear Call
Spread
A bearish income trade: collect a credit and profit if the market stays flat or falls. Defined risk with time decay working for you — here's the build and the numbers.
What it is
A bear call spread (a call credit spread) means selling a lower-strike call and buying a higher-strike call of the same expiry. You collect a net credit and keep it if the underlying stays at or below the lower (sold) strike. It's the bearish mirror of the bull put spread.
Key facts
- Market view: moderately bearish to neutral.
- Construction: Sell 1 lower-strike call + Buy 1 higher-strike call (same expiry).
- Net result: credit — received up front.
- Max profit: the net credit, if it expires at/below the lower strike.
- Max loss: (higher strike − lower strike) − net credit.
- Breakeven: lower strike + net credit.
Bear call spread — keep the credit if price stays below the lower strike; loss capped above the higher strike.
Worked NIFTY example
NIFTY at 22,500. Sell the 22,600 call for 85 and buy the 22,800 call for 35 → net credit 50 (illustrative):
- Max profit: 50, if NIFTY expires at/below 22,600.
- Max loss: (22,800 − 22,600) − 50 = 200 − 50 = 150, at/above 22,800.
- Breakeven: 22,600 + 50 = 22,650.
When to use it
- You're bearish/neutral and want time decay and high IV on your side.
- There's clear OI/price resistance below your short strike.
- You prefer defined-risk credit over a debit trade.
Risks to respect
- Max loss exceeds the credit — a rally above the higher strike hits the cap.
- Skewed risk/reward — manage strikes and sizing carefully.
Build it on live data
Set strikes against live OI resistance and see the credit, breakeven and max loss on TradePulse.
Related strategies
- Bull Put Spread — the bullish credit-spread mirror.
- Bear Put Spread — bearish debit version.
- Iron Condor — combines both credit spreads.