Bull Call Spread
Buying a call and selling a higher-strike call with the same expiration to create defined bullish risk and capped reward.
What is a Bull Call Spread?
Buying a call and selling a higher-strike call with the same expiration to create defined bullish risk and capped reward.
Construction
Buy a lower-strike call and sell a higher-strike call with the same expiration and contract count.
When it may be studied
To study a moderately bullish view with less premium than a standalone long call, in exchange for capped upside.
Expiration profile
Maximum risk: Net debit paid
Maximum reward: Strike width minus net debit
Break-even: Long strike plus net debit
Worked example
Buy a 100 call and sell a 105 call for a $2 net debit. Maximum simplified profit is $3 per share, maximum loss is $2, and break-even is $102.
Key risks and limitations
The full debit can be lost. Assignment and exercise near expiration can create stock exposure if the spread is not managed carefully.
Entry and exit checklist
- Confirm contract multiplier, expiration, exercise style, settlement, and liquidity.
- Calculate the maximum loss under the intended structure.
- Review earnings, dividends, corporate actions, and other event risks.
- Define an exit, adjustment, or expiration plan before entry.
- Understand what happens if one leg is assigned or exercised early.