Basics

Bull & Bear Spreads

Vertical spreads combine two options with the same expiration and different strikes. That makes directional bias, maximum gain, and maximum risk much clearer from the start.

Overview

Credit or debit, bullish or bearish

Research from DeltaValue and LYNX points to a clean structure: `Bull Put` and `Bear Call` are classic credit spreads, meaning premium is received upfront. `Bull Call` and `Bear Put` are debit spreads, meaning premium is paid upfront.

All four are vertical spreads: same underlying, same expiration, two different strikes. That makes risk much easier to control than with naked options.

Bull Put Spread

The bull put spread is bullish to slightly neutral and opens for a net credit.

  • Structure Short put 95, long put 90, same expiration.
  • Example Stock at 100, premium received 1.20 USD.
  • Break-even 93.80 USD.
  • Max gain 120 USD per spread.
  • Max loss 380 USD per spread.

Bear Call Spread

The bear call spread is neutral to bearish and also opens for a credit.

  • Structure Short call 105, long call 110, same expiration.
  • Example Stock at 100, premium received 1.10 USD.
  • Break-even 106.10 USD.
  • Max gain 110 USD per spread.
  • Max loss 390 USD per spread.

Bear Put Spread

The bear put spread is bearish and opens for a net debit.

  • Structure Long put 100, short put 95, same expiration.
  • Example Stock at 100, premium paid 1.80 USD.
  • Break-even 98.20 USD.
  • Max gain 320 USD per spread.
  • Max loss 180 USD per spread.

Bull Call Spread

The bull call spread is bullish and reduces capital outlay versus a naked long call.

  • Structure Long call 100, short call 105, same expiration.
  • Example Stock at 100, premium paid 1.90 USD.
  • Break-even 101.90 USD.
  • Max gain 310 USD per spread.
  • Max loss 190 USD per spread.

Further reading: DeltaValue: Option strategies, DeltaValue: Put options, DeltaValue: Volatility skew, LYNX: Bull put spread trade idea, LYNX: Options in practice.