Bull Call & Bear Put Spread - Top Share Broker

Bull Call Spread & Bear Put Spread: A Step-by-Step Guide for Smart Traders

Bull Call & Bear Put Spread – Options trading offers many strategies for managing risk and maximizing returns. Two of the most popular and beginner-friendly option strategies are the Bull Call Spread and the Bear Put Spread. These spreads are especially useful when you have a directional view of the market — either bullish or bearish — but want to limit both your potential loss and gain.

In this post, we’ll break down both strategies step by step with examples, diagrams, and practical insights.

What is a Bull Call Spread?

Strategy Setup:

Buy a Call Option at a lower strike price (ATM or slightly ITM)
Sell a Call Option at a higher strike price (OTM)
Both options should have the same expiry

Goal:

Profit from a moderate upward movement in the underlying asset, while reducing the premium cost by selling a higher strike call.

1. What is a Bear Put Spread?

A Bear Put Spread is the opposite. Use it when you think a stock’s price will go down — but not too much.

How it works:

You buy one put option at a higher strike price.
At the same time, you sell one put option at a lower strike price.
Both options have the same expiry date.

Selling the lower strike put gives you back some premium, which reduces your total cost — but again, your profit is limited.

Example:

Stock price now: ₹500
You buy a ₹500 strike put option
You sell a ₹480 strike put option

If the stock drops below ₹480, you get the maximum profit. If it stays above ₹500, you lose only the net premium paid.

Key Points of Bear Put Spread:

Best for: When you expect moderate downward movement in price
Risk: Limited to the net premium paid
Reward: Limited to the difference between strike prices minus net premium

Benefit: Cheaper than buying a single put option

Bull Call Spread

A Bull Call Spread is an options strategy used when you’re moderately bullish on a stock or index. It involves buying a call option at a lower strike and selling another call at a higher strike with the same expiry.

Strategy Setup:

Buy a Call Option (Lower Strike – ATM or ITM)
Sell a Call Option (Higher Strike – OTM)
Same Expiry

Example:

Stock: Nifty
Current Price: ₹19,600
View: Bullish till ₹19,800

Buy 19,600 CE @ ₹120
Sell 19,800 CE @ ₹40

Net Premium Paid: ₹80 (₹120 – ₹40)

Max Profit & Loss:

Outcome	Value
Max Profit	₹120 (₹200 spread – ₹80 premium)
Max Loss	₹80 (Net premium paid)
Breakeven Point	₹19,680 (Lower strike + net premium)

Payoff Chart:

Profit
|
| /
| /
| /
|___________/———
₹19,600 ₹19,800 Price

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Bull Call Spread vs. Bear Put Spread – Quick Comparison

Here’s a simple table to help you see the difference:

Feature	Bull Call Spread	Bear Put Spread
Market View	Moderately Bullish	Moderately Bearish
Options Used	Buy Call + Sell Call	Buy Put + Sell Put
Profit Potential	Limited	Limited
Maximum Loss	Net Premium Paid	Net Premium Paid
Breakeven Point	Lower Strike + Net Premium	Higher Strike – Net Premium
Best For	When you expect the stock to go up slightly	When you expect the stock to go down slightly

Why Traders Like These Strategies

Easy for beginners to learn.
Risk is fixed and known from the start.
Cheaper than buying a single call or put option.
Helps you trade smartly in sideways or slow-moving markets.

If you’re new to options trading, starting with a Bull Call Spread or Bear Put Spread can be a simple and safe way to gain confidence. Always remember to check market trends, set your entry and exit plan, and never risk money you can’t afford to lose.