Bull Call Spread: A Defined-Risk Bullish Strategy
A bull call spread is a debit strategy for a moderately bullish view with capped risk and reward. Here's how to build it, plus max profit, loss and break-even.
Short answer: A bull call spread (a call debit spread) is built by buying a lower-strike call and selling a higher-strike call of the same expiry. You pay a net debit. It profits when the underlying rises, with both your maximum profit and maximum loss capped — cheaper than buying a call outright, but with limited upside.
How to build it
- Buy 1 call at a lower strike (closer to the money).
- Sell 1 call at a higher strike (further out).
- Same expiry. The premium received on the short call offsets part of the long call's cost → net debit.
The numbers
| Metric | Formula |
|---|---|
| Net cost | Debit paid |
| Max profit | (Higher strike − Lower strike) − Net debit |
| Max loss | Net debit |
| Break-even | Lower strike + Net debit |
You make the maximum if the underlying closes at or above the higher strike; you lose the full debit if it closes at or below the lower strike.
When to use it
A bull call spread suits a moderately bullish view — you expect a rise but not a moonshot. Selling the higher call lowers your cost and reduces time-decay drag versus a naked long call, at the price of capping upside.
Related structures
- The bearish mirror is the bear put spread.
- For a credit bullish play, see the bull put spread.
- Two opposing credit spreads form an iron condor.
FAQ
Is a bull call spread better than buying a call? It's cheaper and decays slower, but caps your upside. Use it when you expect a measured move, not an explosive one.
What's the risk? Limited to the net debit you paid — defined and known up front.
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