Bear Call Spread

TL;DR: A bear call spread lets you collect premium by selling a call and buying a higher-strike call, profiting when the stock stays flat or drops.

A bear call spread (also called a short call spread or call credit spread) is a two-leg options strategy where you sell a call at a lower strike and simultaneously buy a call at a higher strike, both with the same expiration. You receive a net credit upfront, and your maximum profit is that credit — realized if the stock closes at or below the short strike at expiration. Your maximum loss is the width of the strikes minus the credit received, which occurs if the stock closes above the long strike.

This strategy works best when you have a bearish or neutral outlook and want to take advantage of elevated implied volatility. Because you are a net seller of premium, time decay (theta) works in your favor every day the stock stays below your short strike. The defined-risk structure means you always know your worst-case loss before entering the trade, unlike a naked call which carries theoretically unlimited risk.

Bear call spreads form the upper half of an iron condor. If you are already comfortable with iron condors, you can think of a bear call spread as running just the bearish side. Use TradeSignals to identify stocks with bearish momentum and high IV rank — those are the ideal setups for this strategy.