Bear Call Spread


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Bear Call Spread

In options, a strategy in which one buys call options on a security and then sells the same number of call options on the same security with the same expiration month at a lower strike price. A bear call spread limits both the potential profit and the potential risk, but is most profitable if the security drops moderately in price.
References in periodicals archive ?
Tarun wants to use the bear call spread, while Rahul wants to use the bear put spread.
The cost involved in the bear call spread is Rs 1,850, which is the difference between the amount received from selling the ITM call option (50x65=Rs 3,250) and the amount paid to purchase the OTM call option (50x28=Rs 1,400).
Six strategies: covered calls, naked puts, bull put spreads, bull call spreads, bear call spreads and bear put spreads