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Bullish · Defined risk

Bull Call
Spread

A moderately bullish trade that costs less than a plain call by capping the upside. Defined risk, defined reward — here's how to build it and what the numbers look like.

What it is

A bull call spread (a call debit spread) means buying a lower-strike call and simultaneously selling a higher-strike call of the same expiry. The sold call finances part of the bought call, lowering your cost — at the price of capping how much you can make.

Key facts

  • Market view: moderately bullish.
  • Construction: Buy 1 lower-strike call + Sell 1 higher-strike call (same expiry).
  • Net cost: debit (less than buying the call alone).
  • Max profit: (higher strike − lower strike) − net premium paid.
  • Max loss: the net premium paid.
  • Breakeven: lower strike + net premium paid.

How to construct it

  • Buy a call near the money at the lower strike.
  • Sell a call at a higher strike that matches your upside target.
  • The wider the strikes, the higher the potential profit — and the higher the cost.

Worked NIFTY example

NIFTY at 22,500. Buy the 22,500 call for 150 and sell the 22,700 call for 70 → net cost 80 (illustrative):

  • Breakeven: 22,500 + 80 = 22,580.
  • Max profit: (22,700 − 22,500) − 80 = 200 − 80 = 120, reached at/above 22,700.
  • Max loss: 80 (net premium), if NIFTY expires at/below 22,500.

When to use it

  • You're bullish but expect a measured move, not a runaway rally.
  • You want to cut the cost and time-decay drag of a plain long call.
  • Implied volatility is elevated (selling the higher strike offsets some IV risk).

Risks to respect

  • Your upside is capped at the higher strike — a big rally won't pay more.
  • It's still a debit; if price stalls below breakeven you lose the net premium.
  • Two legs mean two sets of charges and a slightly more complex exit.

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