Stock Market · Option Strategies

Bull call spread

A bull call spread is built for moderate bullish views. You buy a call at a lower strike and sell a call at a higher strike, same expiry.

Construction

Example: Nifty at 22,000.

• Buy 22,100 call @ ₹200
• Sell 22,400 call @ ₹80
• Net premium paid: ₹200 − ₹80 = ₹120

Payoff

• Maximum profit: (22,400 − 22,100) − 120 = ₹180 × 75 = ₹13,500
• Maximum loss: ₹120 × 75 = ₹9,000 (if Nifty stays below 22,100)
• Breakeven: 22,100 + 120 = 22,220

> You need Nifty above 22,220 to make money. Above 22,400, profit is fully capped.

When to use it

• You're moderately bullish. Not expecting a massive rally, just a steady grind up.
• You want to reduce the cost of buying a plain call.
• You can accept a profit cap in exchange for lower premium at risk.

Greeks

Deltapositive (profits if underlying rises)

Thetainitially slightly negative (hurts from time decay)

Vegaslightly positive (helps if volatility rises)

Key mistake

Selling the spread too wide, taking the short strike too far out, makes it barely different from a naked long call. The sold leg must meaningfully reduce your premium.

Takeaway. Bull call spread: buy lower strike call, sell higher strike call. Lower entry cost and defined loss, but profit is capped at the short strike. Use when moderately bullish, not expecting explosive moves.