Strategy Overview
Medium RiskIntermediateBearishNeutral
A bear call spread is a credit spread that profits from neutral to bearish movement. You sell a lower strike call and buy a higher strike call, collecting premium with defined risk.
Max Profit
Premium received
Max Loss
Width of spread - premium received
Breakeven
Short strike + premium received
Probability
~65% win rate
hist. est.
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Example Setup Calculator
$
Credit Received
$250
Max Profit
$250
Max Loss
$250
Breakeven
$97.50 / $102.50
Strategy Components
SELL OTM CALL
Sell OTM call for credit
BUY OTM CALL
Buy further OTM call for protection
When to Use
- You are neutral to bearish on the stock
- You want to collect premium with defined risk
- IV is elevated for better premiums
- You want high probability of profit
Best Market Conditions
- Elevated IV rank
- Bearish or neutral bias
- Clear resistance levels defined
Best Practices
- Place short strike above resistance level
- Target 30-45 DTE for optimal time decay
- Manage at 50% of max profit
- Consider rolling if tested
Ready to Trade?
Review Bear Call Spread and practice it in paper trading with the school workflow.
Paper Trading