Bull Call Spread
Buy a call and sell a higher-strike call to make a cheaper, capped bullish bet with defined risk and reward.
What is a Bull Call Spread?
A Bull Call Spread (debit call spread) buys a lower-strike call and simultaneously sells a higher-strike call of the same expiry. The premium from the short call subsidises the long call, reducing cost and breakeven. In exchange, profit is capped at the higher strike. It is the go-to way to express a moderately bullish view without paying full price for a naked call, and it neutralises much of the Vega and Theta risk.
Payoff Diagram
Profit & Loss at expiry
Per share (multiply by lot size 75). Gold dots mark breakeven points; green = profit, red = loss.
Construction
- Buy 1 ATM/ITM Call (lower strike).
- Sell 1 OTM Call (higher strike), same expiry.
- Net debit paid = maximum loss.
When to Use It
Use when you expect a limited rise to a target level. Preferable to a naked call when IV is high, because you sell expensive premium against the one you buy. The width between strikes sets your risk-reward.
The Greeks
Positive Delta, reduced Gamma/Vega/Theta versus a naked call — the short leg offsets much of the long leg's Greeks.
Risks & Considerations
- Upside capped at the short strike — you cannot profit beyond it.
- Still loses the full debit if the underlying stays below the lower strike.
- Early assignment risk on the short leg for deep-ITM stock options.
Worked Example (Nifty)
Illustrative trade — lot size 75
Nifty 20,000. Buy 20,000 CE ₹200, sell 20,400 CE ₹90. Net debit = ₹110 (₹8,250). Max profit = (400 − 110) × 75 = ₹21,750 at/above 20,400. Max loss = ₹8,250 below 20,000. Breakeven = 20,110.