Bear Call Spread

Description

Selling a lower-strike Call and buying a higher-strike Call.

Trading Logic

Moderately bearish. Limits maximum loss from price spikes.

Practical Example

Stock at $100. Sell $100C ($10), Buy $110C ($3). Net credit: $7.

P/L Curve

Chart Description
  • X-Axis: Stock price at expiration
  • Y-Axis: Expected P/L ($)
  • Green area: Profit; Red area: Loss