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What is a bear call spread?

What is a bear call spread?

A bear call spread seeks to make money on the sale of call options but does not believe the underlying security will increase.

A Bear Call Spread strategy is utilized when one believes that the price of the underlying stock will go down (but not significantly) in the near future. It entails selling a call short at a lower price than you buy a long call, which is done to realize a net credit at the outset.

This is your maximum gain on this position. The long call is there to limit losses if the underlying stock goes up. As a limited gains/ limited loss position, it is a conservative play.

Keywords: portfolio management, bearish, call option, strike price, calls, options, conservative strategies, limited loss, limited profit,