Bear Call Spread

A defined-risk bearish credit spread — keep the premium if it stays down · payoff at expiration

Worked example

Sell the $100.00 call and buy the $110.00 call for a net $400.00 credit — capital required $600.00. Max profit $400.00, max loss -$600.00, breakeven $104.00.

At expiration: if the stock is at $120.00, the position shows a net P&L of -$600.00; if the stock is at $90.00, the position shows a net P&L of $400.00.

When to use

You expect the stock to stay below the lower strike — you profit from time passing, not from a big move.
You want to collect premium with a known, capped maximum loss (unlike a naked short call).
You prefer a high-probability, limited-reward position over paying a debit.

Common pitfalls

Your profit is capped at the net credit — even a sharp drop earns no more.
The max loss (width minus credit) exceeds the credit collected, and ties up margin until expiration.
A rally above the higher strike realizes the full loss; manage before assignment risk grows.