what is a bear call spread 
a bear call spread or a bear call credit spread is a type of options strategy used when an options trader expects a decline in the price of the underlying asset a bear call spread is achieved by simultaneously selling a call option and buying a call option at a higher strike price but with the same expiration date the maximum profit to be gained using this strategy is equal to the credit received when initiating the trade a bear call spread is also called a short call spread it is considered a limited risk and limited reward strategy advantages of a bear call spreadthe main advantage of a bear call spread is that the net risk of the trade is reduced purchasing the call option with the higher strike price helps offset the risk of selling the call option with the lower strike price it carries far less risk than shorting the stock or security since the maximum loss is the difference between the two strikes reduced by the amount received or credited when the trade is initiated selling a stock short theoretically has unlimited risk if the stock moves higher if the trader believes the underlying stock or security will fall by a limited amount between the trade date and the expiration date then a bear call spread could be an ideal play however if the underlying stock or security falls by a greater amount then the trader gives up the ability to claim that additional profit it is a trade off between risk and potential reward that is appealing to many traders example of a bear call spreadlet s assume that a stock is trading at 45 an options trader can use a bear call spread by purchasing one call option contract with a strike price of 40 and a cost premium of 0 50 0 50 100 shares contract 50 premium and selling one call option contract with a strike price of 30 for 2 50 2 50 100 shares contract 250 in this case the investor will receive a net credit of 200 to set up this strategy 250 50 if the price of the underlying asset closes below 30 upon expiration then the investor will realize a total profit of 200 or the full premium received the profit from the bear call spread therefore maxes out if the underlying security closes at 30 the lower strike price at expiration if it closes farther below 30 there will not be any additional profit if it closes between the two strike prices there will be a reduced profit while closing above the higher strike 40 will result in a loss of the difference between the two strike prices reduced by the amount of the credit received at the onset image by sabrina jiang investopedia 2021