Bear Call Spreads for Beginners - Options Learning Center
Welcome to the Options Learning Center, where we will explore a wide range of topics and ideas related to options trading. This video will explain bear call spreads!
The bear call spread is a short call option strategy where you expect the underlying security to decrease in value. The bear call option strategy involves selling a call option around the price of the underlying security and buying a call option at a higher strike price.
Maximum profit is the difference between the premium received for the short call and the premium paid for the long call (Net Credit). Maximum loss is limited to the difference in strike values minus the Net Credit, which will occur if the underlying security price is above the higher strike price at expiration. The bear call strategy succeeds if the security price is below breakeven (lower strike + Net Credit). Maximum profit is achieved if the security price is below the lower strike price at expiration.
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