Bear Call Spread — Options Strategy

A bear call spread is a credit strategy for traders with a moderately bearish or neutral outlook. You sell a call at a lower strike and buy a call at a higher strike—both with the same expiration—collecting a net credit upfront. Maximum profit is the credit received (when both calls expire worthless); maximum loss is the spread width minus the credit (when the stock closes above the upper strike).

Bear call spreads are a mirror image of bull put spreads: instead of protecting against downside, you are collecting premium for the stock not making a big upside move. The position profits if the stock falls, stays flat, or rises modestly but remains below the short call strike by expiration—a wide profit zone that benefits from sideways to bearish markets.

The strategy is particularly effective when a stock has recently made a significant rally and appears extended or overbought. Selling a call spread at or above a key technical resistance level gives you multiple layers of protection: the stock must break through resistance AND continue higher past your short call strike before the position loses money.

Selecting strikes at a delta of 0.20-0.30 on the short call provides a high probability of success (70-80% chance both calls expire worthless) while still generating a meaningful credit. The long call at a higher strike limits your maximum loss—critical for managing catastrophic risk in stocks that can gap up sharply on news.

Management mirrors other credit spreads: close at 50% of maximum credit for early profit capture, and roll or close if the stock approaches the short call strike. Bear call spreads combine naturally with bull put spreads to form iron condors—a market-neutral, premium-collecting position that profits from a stock remaining within a wide range.