{"id":2473,"date":"2010-02-21T21:48:15","date_gmt":"2010-02-21T16:18:15","guid":{"rendered":"http:\/\/www.niftylivecharts.com\/blog\/?p=2473"},"modified":"2010-02-21T21:48:15","modified_gmt":"2010-02-21T16:18:15","slug":"call-bearspread-option-trading","status":"publish","type":"post","link":"https:\/\/www.niftylivecharts.com\/blog\/call-bearspread-option-trading\/","title":{"rendered":"Call Bearspread &#8211; Option Trading"},"content":{"rendered":"<p>A bear call spread is a limited profit, limited risk options trading strategy that can be used when the options trader is moderately bearish on the underlying security. It is entered by buying call options of a certain strike price and selling the same number of call options of lower strike price (in the money) on the same underlying security with the same expiration month.<\/p>\n<p>When your feeling on a stock is generally negative, bear spreads are nice low risk, low reward strategies. One of the easiest way to create a bear spread is by using call options at or near the current market price of the stock.<\/p>\n<p>Like bear put spreads, bear call spreads profit when the price of the underlying stock decreases. Bear call spreads are typically created by selling at-the-money calls and buying out-of-the-money calls.<\/p>\n<p><span style=\"text-decoration: underline;\"><strong>Risk \/ Reward<\/strong><\/span><\/p>\n<p><strong>Maximum Loss:<\/strong> Limited to the difference between the two strikes minus the net premium.<\/p>\n<p><strong>Maximum Gain:<\/strong> Limited to the net premium received for the position. I.e. the premium received for the short call minus the premium paid for the long call.<br \/>\nCharacteristics<\/p>\n<p><strong>When to use:<\/strong> When you are mildly bearish on market direction.<\/p>\n<p>A call bear spread is usually a credit spread. A credit spread is where the net cost of the position results in you receiving money up front for the trade. I.e. you sell one call option (receive $5) and the buy one call option ($4). The net effect is a credit of $1.<\/p>\n<p>This type of spread is used when you are mildly bearish on market direction. Same idea as the Call Bull Spread but reversed &#8211; i.e. you think the market will go down but think that the cost of a short stock or long put is too expensive.<\/p>\n<p><a class=\"highslide\" onclick=\"return vz.expand(this)\" href=\"https:\/\/www.niftylivecharts.com\/blog\/wp-content\/uploads\/2010\/02\/call-2bear-spread.gif\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-2474\" title=\"call-2bear-spread\" src=\"https:\/\/www.niftylivecharts.com\/blog\/wp-content\/uploads\/2010\/02\/call-2bear-spread.gif\" alt=\"\" width=\"468\" height=\"300\" srcset=\"https:\/\/www.niftylivecharts.com\/blog\/wp-content\/uploads\/2010\/02\/call-2bear-spread.gif 468w, https:\/\/www.niftylivecharts.com\/blog\/wp-content\/uploads\/2010\/02\/call-2bear-spread-300x192.gif 300w\" sizes=\"auto, (max-width: 468px) 100vw, 468px\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A bear call spread is a limited profit, limited risk options trading strategy that can be used when the options trader is moderately bearish on the underlying security. It is entered by buying call options of a certain strike price and selling the same number of call options of lower strike price (in the money) [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[7],"tags":[6588,2685,11387,722,554],"class_list":{"0":"post-2473","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-future-and-options","7":"tag-call-bear-spread","8":"tag-call-options","9":"tag-future-and-options","10":"tag-option-trading","11":"tag-stock-option-trading","12":"entry","13":"has-post-thumbnail"},"_links":{"self":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/2473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/comments?post=2473"}],"version-history":[{"count":0,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/2473\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/media?parent=2473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/categories?post=2473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/tags?post=2473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}