Bear call spread

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Bear call spread
In finance, 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 with the same expiration month.
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A Guide to Futures | Options Market Terminology : English English DictionaryDownload this dictionary
Bear call spread
The purchase of a call with a high strike price against the sale of a call with a lower strike price. The maximum profit receivable is the net premium received (premium received - premium paid), while the maximum loss is calculated by subtracting the net premium received from the difference between the high strike price and the low strike price (high strike price - low strike price net premium received). A bear call spread should be entered when lower prices are expected. It is a type of vertical spread.


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