Definition
A bear call spread is an options position built by selling one call option and buying another call with a higher strike price and the same expiration. Because the option sold is more valuable than the option bought, the trade is opened for a net credit.
The strategy expresses a moderately bearish or neutral view: the trader expects the underlying to stay below the lower strike, allowing both calls to expire worthless and the credit to be kept.
Why it matters
How it works
Suppose a stock trades near a price and the trader sells a call at one strike while buying a call ten points higher. The premium difference is collected up front. If the stock closes below the lower strike at expiration, both calls expire worthless and the trader keeps the full credit. If the stock rallies above the upper strike, the loss is the strike width minus the credit. Between the strikes, the result scales linearly. The position is a member of the credit-spread family and pairs naturally with the bull put spread used on the other side of the market.