1. What it is
Buy the lower-strike call and sell the higher-strike call, with equal quantity and the same expiration.
2. Why use it
Reduce the cost of a bullish call by giving up gains above a higher strike.
3. How the numbers work
SPY · Teaching example · Reference price $500
All option legs have the same expiration. Premiums are per share. Each standard contract represents 100 shares.
| Side | Option type | Strike | Quantity | Premium |
|---|---|---|---|---|
| Buy | Call | 500 | 1 | 5 |
| Sell | Call | 520 | 1 | 2 |
- Net premium
- −5 × 1 + 2 × 1 = -$3.00 × 100 = -$300.00
- Maximum expiration profit
- $1,700.00
- Maximum expiration loss
- $300.00
- Expiration breakeven
- $503.00
Expiration scenarios
| Underlying at expiration | Profit / loss |
|---|---|
| 500 | -$300.00 |
| 503 | $0.00 |
| 520 | $1,700.00 |
Illustrative prices, before fees. Expiration payoffs exclude early assignment and changes in time value or volatility. Editing strikes keeps the entered premiums; no market quotes are fetched.
Explore this example ↗4. How it changes
Net delta is positive. The legs partly offset gamma, theta and vega; their net signs can change as price crosses the spread.
5. What to watch for
For an intact same-expiration spread, the debit is the maximum expiration loss and strike width minus debit is the maximum profit.
A higher underlying price stops adding expiration profit above the short strike. Assignment can create stock exposure if the legs are handled separately.