BEAR CALL SPREAD | bear strategy

Bear Call Spread

Example: Sell 1 call; buy 1 call at higher strike
Market Outlook: Neutral to bearish
Risk: Limited
Reward: Limited
Increase in Volatility: Typically hurts position slightly
Time Erosion: Helps position
Break-Even Point (BEP): Short call strike plus credit received

The bear call spread option trading strategy is employed when the options trader thinks that the price of the underlying asset will go down moderately in the near term.

The bear call spread option strategy is also known as the bear call credit spread as a credit is received upon entering the trade.

Bear call spreads can be implemented by buying call options of a certain strike price and selling the same number of call options of lower strike price on the same underlying security expiring in the same month.

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