Bear call spread
Sell a call, buy a higher call. Get paid to bet NIFTY won't rally much.
Lesson 5 of 126 min read
The idea
You think NIFTY won't rise above 22,400 in two weeks — it might fall, it might go sideways. Sell a call for income, and buy a higher call so a surprise rally can't hurt you badly.
| Leg | Action | Option | Price |
|---|---|---|---|
| 1 | Sell | 22400 CE | ₹256.20 |
| 2 | Buy | 22600 CE | ₹163.55 |
| Net credit | ₹92.65 |
You receive
₹6,022
92.65 × 65, upfront
Max profit
₹6,022
At or below 22,400
Max loss
₹6,978
At or above 22,600
Breakeven
22,492.65
Lower strike + credit
22,400
If NIFTY ends at 22,400, you make ₹6,022.
| NIFTY at expiry | Net P&L (1 lot) |
|---|---|
| 22,000 | +₹6,022.25 |
| 22,400 | +₹6,022.25 |
| 22,500 | −₹477.75 |
| 22,600 | −₹6,977.75 |
| 23,000 | −₹6,977.75 |
The four spreads on one page
You've now seen all four vertical spreads. They're two pairs of mirrors:
| Strategy | Built with | Upfront | View | Time decay |
|---|---|---|---|---|
| Bull call spread | Calls | Pay | Up, moderately | Hurts |
| Bull put spread | Puts | Receive | Not down | Helps |
| Bear put spread | Puts | Pay | Down, moderately | Hurts |
| Bear call spread | Calls | Receive | Not up | Helps |
Quick check
You expect NIFTY to drift sideways to slightly lower, and IV is high. Which spread fits?