Bear Call Spread Calculator

What Is a Bear Call Spread?

A bear call spread, or call credit spread, is a strategy where you sell a call at a lower strike and buy a call at a higher strike, both with the same expiration date. This is a bearish strategy with limited risk and limited profit potential. You collect a credit at trade entry and profit if the stock stays below the short strike. It is one of the four vertical spread strategies. Learn more in our complete bear call spread guide.

Key Characteristics

• Max Profit: Limited to the total premium received at entry. Achieved when the stock closes at or below the short strike at expiration—both options expire worthless.
• Max Loss: (Spread width − net credit) × 100 × number of contracts. Occurs when the stock closes at or above the long strike at expiration.
• Breakeven: Short strike + net credit
• Outlook: Moderately bearish

How to Read the P/L Chart

The cyan line (T+0) shows your theoretical P/L at trade entry. Before expiration, the curve is smoother because both options still have time value. As a credit spread seller, time decay works in your favor when the stock is below the short strike.

T+0 means "today plus 0 days," while T+30 would mean "today plus 30 days." It's a common convention for payoff diagrams that show multiple points in time.

The white line (Expiration) shows your profit or loss at expiration. If the stock is below the short strike, you keep the full premium and achieve max profit. Between the strikes, your profit decreases as the stock rises. Above the long strike, your loss is capped because the long call offsets the short call 1-for-1.

The gap between the T+0 line and expiration line shows time decay. When T+0 is below the expiration line, the position has positive theta—you make money as time passes. When T+0 is above the expiration line, you have negative theta—you lose money as time passes.

Try hovering over the P/L chart at various stock prices and compare the T+0 and Expiration P/L values.

Using This Calculator

Enter the following trade details:

1. Stock Price: The price of the stock at trade entry.
2. Short Strike: The lower strike where you sell the call.
3. Long Strike: The higher strike where you buy the call (further OTM).
4. LC/SC Prices: If calculating with prices, enter the prices you pay/receive for the long call (LC) and short call (SC). The short call price will always be higher.
5. Days to Expiration: Time remaining until both options expire.
6. Implied Volatility: If calculating with IV, enter the implied volatility for both calls. Implied volatility is the market's expectation of future price movements, as reflected in the stock's options.
7. Dividend Yield: The stock's annual dividend yield.
8. Risk-Free Rate: The current risk-free interest rate.
9. Quantity: Number of spreads.

Bear Call Spread vs Short Call

A naked short call has unlimited risk if the stock rises. A bear call spread limits your risk by implementing the long call above the short call. The trade-off is that you collect less premium (lower profit potential) than the naked short call, but you get defined risk and lower margin requirements. If you're bearish but want protection against an unexpected rally, the bear call spread is the safer choice.

I always advise against trading naked short calls. It's always worth buying a far OTM call against the short call to limit the risk and protect against outlier movements.

Bear Call Spread vs Bear Put Spread

Both are bearish strategies, but they differ in construction.

A bear call spread is a short call with a higher-strike long call. It collects a credit at entry and is typically OTM, resulting in positive theta. The credit for an OTM call spread will be small, resulting in more risk than profit potential (but with a high probability of profit).

A bear put spread is a long put with a lower-strike short put. You pay a debit at entry and profit when the stock falls through the strikes. Bear put spreads are typically set up with an ITM long put and OTM short put, resulting in less exposure to time decay—and sometimes even positive theta.

A bear put spread with an ITM/OTM setup will have roughly equal risk/reward. As the strikes are moved lower (like buying an ATM put and shorting an OTM put), the risk/reward improves, but with a lower probability of profit.

A Note on Early Assignment

The short call can be assigned early if it's ITM. This is most likely when the short call is deep ITM with little extrinsic value, or when an ex-dividend date is approaching and the dividend exceeds the short call's extrinsic value.

If the short call is only slightly ITM with plenty of time until expiration (7+ days), it will have significant extrinsic value and early assignment is unlikely. The best way to gauge early assignment risk is to monitor the extrinsic value in the short call—the closer it is to zero, the higher the likelihood of early assignment.

Assignment at Expiration

Getting assigned by holding ITM options through expiration is different. If only your short call expires ITM, you'll end up with short stock and no long call hedge. Your risk profile changes from limited risk to theoretically unlimited risk on the short stock.

If both calls expire ITM, they offset, and you end up with no stock position. So if only your short call is ITM going into expiration, it's good to close it to avoid ending up with naked short stock on the next trading day.

Bear Call Spreads in Multi-Leg Strategies

The bear call spread is half of a short iron condor. Combine your bear call spread with a bull put spread below the stock price to create an iron condor—a neutral strategy that profits from range-bound price action. Read our iron condor options strategy guide for detailed examples and explanations.

Related Calculators

• Bear Put Spread Calculator — Debit spread alternative
• Bull Call Spread Calculator — Bullish counterpart
• Iron Condor Calculator — Combine with the bull put spread
• All Vertical Spread Calculators — Bullish and bearish spreads