Bull Call Spread
A bull call spread buys a lower call and sells a higher call to bet on a rise cheaply. Learn how it works, your max profit and loss, and when to use it.
A bull call spread is a bullish trade where you buy one call and sell a higher-strike call at the same expiration. You pay to enter, but the call you sell lowers your cost. In return, your profit is capped. It is the cheaper, defined-risk way to bet a stock will rise.
If a plain call feels too expensive, this is the trade that solves it. Let me show you.
Cheaper Bullish Bet
You are bullish on Apple, but a plain $200 call costs $8 a share, which is $800. That is more than you want to risk. So you build a bull call spread: keep the call you want, and sell a higher call to help pay for it.
The higher call brings in premium that offsets your cost. The catch is that selling it caps your gains above that higher strike. You trade away the moonshot in exchange for a much cheaper entry and a clearly defined risk. It is a vertical spread, built from two calls.
Watch It Work
Apple is at $200. You build the spread:
- Buy the $200 call for $8 a share
- Sell the $210 call for $3 a share
- Net cost: $8 minus $3, which is $5 a share, or $500
You cut your cost from $800 to $500. Now the outcomes.
Apple rises to $210 or higher. Your $200 call is worth $10, the full gap between the strikes. After your $5 net cost, you keep $500. That is your maximum, no matter how high Apple climbs, because the $210 call you sold caps you there.
Apple stays at $200 or below. Both calls expire worthless. You lose your $5 net cost, which is $500. That is your maximum loss.
When to Use It
A bull call spread fits when you are bullish but want to spend less and cap your risk.
It shines when you expect a moderate rise, not a rocket launch. You give up the unlimited upside of a plain call, so if you truly expect a massive move, a plain long call may serve you better. But for a measured "I think this drifts up to about $210," the spread is cheaper, defines your risk cleanly, and often has a better risk-reward for the move you actually expect.
- A bull call spread buys a lower call and sells a higher call.
- It is a cheaper, bullish trade with defined risk.
- Max profit is the strike gap minus net cost; max loss is the net cost.
- Best for a moderate rise, not a huge one.
Pop Quiz
Three quick questions to see what stuck. Pick an answer and the explanation shows up right away.
How do you build a bull call spread?
You buy the lower call and sell the higher one. The sold call cuts your cost and caps your profit.
Buy the $200 call for $8, sell the $210 call for $3. What is your max loss?
Net cost is $8 minus $3, or $5 a share, which is $500. That is the most you can lose.
When does this spread fit best?
The capped upside makes it ideal for a measured rise. For a huge move, a plain long call keeps the upside open.
Bottom Line
A bull call spread is the budget-friendly bullish trade. You buy a call and sell a higher one, cutting your cost and boxing in your risk. If the stock climbs to the higher strike, you collect your capped max profit. If it stalls, you lose only your net cost.
It is the tool for a moderate rise: cheaper than a plain call, with a clearly defined worst case and best case set the moment you enter.
Keep going: the general shape is the vertical spread, and the bearish mirror is the bear put spread.