Bear Call Spread Strategy with Example

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Bear Call Spread Strategy  with Nifty Example

The Bear Call Spread is a popular bearish options strategy used when you expect the market to stay below a certain level or move slightly downward.

It is a limited profit, limited loss strategy and works best in a range-bound to mildly bearish market.

What is a Bear Call Spread?

A Bear Call Spread involves:

  • 🔹 Selling a lower strike Call Option

  • 🔹 Buying a higher strike Call Option

  • 🔹 Same expiry date

It is also called a Credit Spread because you receive premium upfront.

Example: Nifty February Expiry

Let’s understand with your given strikes:

  • Sell Nifty Feb 25500 CE @ ₹222

  • Buy Nifty Feb 25700 CE @ ₹50

Assume Nifty is trading near 25500.

Step 1: Net Premium Received (Credit)

Net Credit = 222 – 50
Net Credit = ₹172

This ₹172 is your maximum possible profit.


Maximum Profit

Maximum Profit = Net Premium Received

= ₹172 per lot

👉 This happens if Nifty expires at or below 25500.

Both options expire worthless, and you keep the full premium.

Maximum Loss

Strike Difference = 25700 – 25500 = 200

Maximum Loss = Strike Difference – Net Credit
= 200 – 172
= ₹28 per lot

👉 This occurs if Nifty expires at or above 25700.

Loss is limited because you bought the 25700 CE for protection.

Break-even Point

Break-even = Lower Strike + Net Premium

= 25500 + 172
= 25672

If Nifty expires below 25672, the strategy is profitable.

Expiry Scenarios

1️⃣ If Nifty closes below 25500

✔ Both calls expire worthless
✔ Profit = ₹172 (Max Profit)

2️⃣ If Nifty closes between 25500 and 25700

✔ Partial loss/profit
✔ Profit reduces gradually

3️⃣ If Nifty closes above 25700

✔ Maximum Loss = ₹28
✔ Loss is limited and predefined

Why Use Bear Call Spread?

✔ Market is bearish or sideways
✔ Strong resistance near 25500–25600
✔ Want limited risk strategy
✔ Want to benefit from time decay

This strategy is ideal when you believe Nifty will not cross a resistance zone.

Strategy Summary Table

ComponentValue
Market View        Bearish / Range-bound
Sell Strike          25500 CE
Buy Strike         25700 CE
Net Credit                 ₹172
Max Profit          ₹172
Max Loss          ₹28
Break-even         25672

Final Thoughts

The Bear Call Spread is a smart income strategy for traders who:

  • Expect limited upside

  • Prefer defined risk

  • Want high probability trades

  • Use resistance-based trading setups

It allows you to earn premium while keeping risk under control — making it a professional-level options strategy.


#OptionsTrading #NiftyOptions #BearCallSpread #OptionsStrategy #StockMarketIndia #DerivativesTrading #IncomeStrategy

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