Bull Call Spread & Bear Put Spread

Lesson Content

A Bull Call Spread and Bear Put Spread are advanced options strategies that limit risk while providing defined profit potential. In a Bull Call Spread, you buy a call option at a lower strike price and simultaneously sell a call option at a higher strike price in the same expiration. This strategy profits from a moderate rise in the underlying asset. For example, if Reliance is trading at ₹2500, you might buy a 2400 call at ₹120 and sell a 2600 call at ₹40, creating a net debit of ₹80. The maximum profit is ₹120 (2600-2400-80), achieved if Reliance closes above 2600 at expiration. Conversely, a Bear Put Spread involves buying a put option at a higher strike and selling a put at a lower strike. If Nifty is at 19000, you could buy a 19200 put at ₹150 and sell a 18800 put at ₹60, resulting in a net debit of ₹90. Maximum profit is ₹310 (19200-18800-90), realized if Nifty closes below 18800. Both strategies reduce premium cost compared to single options but limit profit potential.