EXAMPLE
Bear call credit spread
Illustrative example
- Underlying
- $100.00
- Entry credit before fees
- $110
- Breakeven
- $106.09
- Max profit
- $108.7
- Max loss
- -$391.3
- Expires
- 2026-10-16
Premium strategy tool
Bear Call Credit Spread Screener
A bear call credit spread sells a lower-strike call and buys a higher-strike call in the same expiration. It profits if the stock stays below the short strike, and the long call caps the loss.
Unlike an uncovered short call, the protective call makes the worst case known at expiration.
Product preview
The chart below is the same payoff component used inside the platform, run on the hypothetical example described later on this page.
Bear call credit spread
Sell a call and buy a higher call: a credit now, with loss limited to the spread width minus the credit.
Illustrative example
- Sell$105 call
- Buy$110 call
Profit zoneLoss zoneStock priceBreakeven
- Example stock
- $100.00
- Entry credit before fees
- $110
- Breakeven
- $106.09
- Max profit
- $108.7
- Max loss
- -$391.3
- Evaluated at
- Expiration
Includes $0.65 entry commission per option contract. Exit, exercise/assignment fees and taxes are excluded.
Payoff scenario
Illustrative example, read-only. Hypothetical inputs run through TradingSignalAI's payoff model.
Illustrative example
- Hypothetical underlying
- $100.00
- Entry credit before fees
- $110 ($1.10/share)
- Position · standard 100-share contracts
- Sell $105 call · buy $110 call
Expiration payoff
1 structure · 100 shares per option leg · expires 2026-10-16
Hover, touch, or focus the chart and use arrow keys to read P/L at a price.
- Shaded above $0: profit
- Shaded below $0: loss
- Solid line: P/L at expiration
- Dashed line: reference price
- Circle: break-even
- Dotted line: strike (values below)
- Break-even
- $106.09
- Strikes
- $105.00, $110.00
- Payoff profit cap
- $108.7
- Max loss
- $391.3
The chart shows underlying prices from $88.00 to $122.00 only. Losses or gains outside this window can be larger; the window's lowest and highest points are not maximum risk.
Includes $0.65 entry commission per option contract. Exit, exercise/assignment fees and taxes are excluded.
Move the pointer or focus the chart and use the left and right arrow keys to read profit or loss at each stock price. These are not live quotes or signals.
Metrics in pictures
Implied volatility: the range the market prices in
Example: $100 stock, 30 days to expiration. One-standard-deviation move = stock x IV x sqrt(days / 365).
Illustrative example
- Lower IV 20%+/- $5.73
Smaller expected range, lower premium for the same strike and expiration.
- Typical IV 30%+/- $8.6
A middle reading for this example.
- Higher IV 50%+/- $14.33
Wider expected range and larger premium, with more risk of a large move.
Bars span the one-standard-deviation range around the stock price. Not a forecast. IV rank in the product uses a realized-volatility proxy, not a historical implied-volatility rank.
Delta: directional exposure
Select a delta to see what it means for one call contract.
Illustrative example
Out of the money, delta 0.30
Moderate sensitivity. Sold options here collect more premium than at 0.15 and are more likely to finish in the money.
One standard contract has about 30 shares of price exposure: roughly $30.00 per small $1 stock move, or $0.30 per quoted share, with other inputs held constant.
Delta is a model sensitivity, not a probability forecast. Values shown are examples, not quotes.
How the bear call credit spreads tool works
- The finder pairs calls with a defined width in the same expiration.
- Candidates are filtered by liquidity and compared by credit, breakeven and return on risk.
- The payoff chart shows both strikes and breakeven at expiration.
- Warnings flag upcoming events and thin markets where detected.
Metrics you will see
| Metric | Meaning |
|---|---|
| Net credit | Short call bid minus long call ask. |
| Maximum profit | Net credit times 100. |
| Maximum loss | (Width - credit) x 100. |
| Breakeven | Short strike plus net credit. |
| Return on risk | Maximum profit over maximum loss. |
Worked example
Hypothetical example for a stock trading at $100. Not a quote, a recommendation or a result. Sell the $105 call and buy the $110 call for a $1.10 credit.
| Item | Calculation |
|---|---|
| Maximum profit | $110 if the stock closes at or below $105 |
| Maximum loss | ($5.00 - $1.10) x 100 = $390 at or above $110 |
| Breakeven | $105 + $1.10 = $106.10 |
| Return on risk | $110 / $390 = 28.2% |
Chart values include $1.30 of entry commissions, so they differ slightly from these before-fee figures.
Risks to understand
- A sharp rally can produce the full maximum loss quickly, especially after takeover news or earnings.
- The short call can be assigned early, particularly before dividends, creating a short stock position.
- Gap risk: a stock can open beyond both strikes.
- Four-way costs, spreads and slippage reduce the net credit.
Access
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Eligible new customers can begin a 7-day Premium trial. A payment method is required, and the selected plan bills automatically at the end of the trial unless canceled. Registration alone is not a Premium subscription.
Frequently asked questions
Learn more
- Options Assignment: Share Delivery & RiskUnderstand exercise, early assignment, share delivery and expiration risk. Learn why covered positions and defined-risk spreads still need active review.
- Options Delta: Sensitivity, Not a GuaranteeLearn what delta measures, how call and put deltas differ, and why a delta-based probability estimate is not a guaranteed assignment or profit forecast.
- Options Premium: Quotes, Spreads & ExecutionLearn how option premium is quoted per share, how contract size changes cash amounts, and why bid, ask, midpoint and fill prices are different.
- Options Expiration, DTE & Return ComparisonsUnderstand days to expiration, exercise and assignment timing, and why normalized or annualized returns are comparisons rather than income promises.
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Research the trade before you place it
Create a free account to record holdings and cash and browse universe research. Premium adds the strategy tools. Eligible new customers can start a 7-day Premium trial; a payment method is required and the plan bills automatically unless canceled. Registration alone is not a Premium subscription.