Bull Call Spread: How It Works, Example and Risks
A bull call spread buys a call and sells a higher-strike call in the same expiration. Traders use it for a moderately bullish view at lower cost. The main risk is losing the net debit if the stock stays below the long strike.
At a glance
| Outlook | bullish |
|---|---|
| Level | intermediate |
| Max profit | (Width − net debit) × 100 |
| Max loss | Net debit × 100 |
| Breakeven | Long strike + net debit |
| Greeks exposure | Positive delta, small theta and vega |
| Ideal IV environment | Low to moderate IV |
Payoff diagram
Worked example
Buy the $100 call for $4.00, sell the $110 call for $1.50: net debit $2.50 ($250). Breakeven $102.50. Max profit ($10 − $2.50) × 100 = $750 at $110 or above.
How to manage it
- Take profits at 50–75% of max.
- Choose a short strike near your price target.
- Close before expiry if the short call is ITM.
Risks
- Lose the full debit below the long strike.
- Capped upside.
- Assignment on the short call.
Questions
Why sell the higher call?
It lowers cost and breakeven in exchange for capping profit.
What's the max loss?
The net debit — $250 here.
Debit spread vs long call?
Spreads cost less and decay slower but cap gains.
Related
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