1. What it is
Sell the lower-strike call and buy the higher-strike call at the same expiration and quantity.
2. Why use it
Collect premium for a price ceiling view, with a higher call limiting the loss.
3. How the numbers work
View example
- Sell 1 × Call · Strike 100
- Buy 1 × Call · Strike 105
All option legs have the same expiration.
- Option premium received
- 2
- Expiration breakeven
- 102
- Maximum expiration profit
- 2
- Maximum expiration loss
- 3
- Underlying at expiration 100 → Profit 2
- Underlying at expiration 110 → Loss 3
4. How it changes
Net delta is negative. Time passing can help around the profitable region, while an upward move can quickly change the net delta through gamma.
5. What to watch for
Maximum expiration loss is strike width minus credit for the intact spread. Closing or exercising one leg changes that bound.
Bearish does not mean a decline is required: the position can profit if price stays below the short strike. The actual entry credit determines the breakeven.
Examples use illustrative entry prices and amounts per underlying unit, before costs. Contract amounts require the contract multiplier. Expiration payoffs assume the illustrated legs remain intact; earlier position values and exercise or assignment outcomes can differ.