Bear call spread
Sell a call and buy a higher-strike call. You collect a premium and keep it if the index stays below the sold strike.
How it is built
- Sell 1 lot of an out-of-the-money call (CE).
- Buy 1 lot of a further out-of-the-money call (CE), same expiry, as protection.
A structure for a view that the index will stay below a level by expiry, with the loss capped by the bought call.
Risks
- The maximum loss is larger than the maximum profit.
- A sharp rally can reach the maximum loss quickly.
- Selling options needs margin set by the exchange (SPAN plus exposure margin), usually far more than the premium received.
How the Greeks behave
- Delta
- Negative
- Theta
- Positive while the index stays below the sold strike
- Vega
- Negative
Worked example on Nifty 50
| Leg | Premium per unit | Cash flow |
|---|---|---|
| Sell 1 lot 25,250 CE | ₹104.18 | +₹6,772 |
| Buy 1 lot 25,750 CE | ₹15.76 | −₹1,025 |
Profit and loss at expiry
For the whole position, before charges.
Premiums are theoretical Black–Scholes values from round, illustrative inputs, not market prices. Charges and margin are not included.Price a single leg with your own numbers.
Bear call spread on other indices
Frequently asked questions
What is the maximum profit on a bear call spread?
The net premium received, if the index ends below the sold call strike.
What is the maximum loss?
The strike difference minus the net premium, times the lot size, if the index ends above the bought call strike.
Is a bear call spread the same as a bear put spread?
Both profit from a fall, but the bear call spread is a credit spread that also profits if the index just stays put, while the bear put spread is a debit spread that needs a fall.