Bear Call Spread Calculator
Calculate max profit, max loss, breakeven, and return on risk for a bear call spread options strategy.
Enter the two strike prices, net premium, and number of contracts.
A bear call spread is a credit spread used when you expect a stock to stay flat or fall. You sell a lower-strike call (collecting premium) and buy a higher-strike call (paying premium for protection). The net result is a credit to your account.
Setup:
- Sell 1 call at strike K1 (lower), collect premium P1
- Buy 1 call at strike K2 (upper), pay premium P2
- Net credit received = P1 - P2 (must be positive for this to be a credit spread)
Outcomes at expiration:
- Stock finishes below K1: both calls expire worthless, you keep the full credit. Maximum profit.
- Stock finishes between K1 and K2: sold call is in the money, spread value is (stock - K1). Partial loss.
- Stock finishes above K2: spread is worth its maximum value of (K2 - K1). Maximum loss occurs.
Max profit = net credit x 100 (per contract, since each covers 100 shares) Max loss = (K2 - K1 - net credit) x 100 Breakeven = K1 + net credit Return on risk = max profit / max loss
Bear call spreads cap both profit and loss, unlike selling a naked call (which has unlimited loss potential). This defined-risk profile makes them popular for income generation when implied volatility is high – you collect more premium when the market is fearful.
The main risk: a sharp upward move before expiration forces assignment on the short call. Most traders close the spread early (buy back) if it reaches 50% of max profit rather than holding to expiration.