Bull Call Spread Strategy — Guide, Payoff & Calculator

A bull call spread is a defined-risk bullish options strategy built by buying a call and simultaneously selling a higher-strike call in the same expiration. Compared to buying a single call, the short call lowers cost and sets a known profit cap.

Use the interactive chart below or jump to the setup guide to select strikes and expiration with a clear risk budget.

Interactive Payoff Chart

When to Use a Bull Call Spread

• Outlook: Moderately bullish; expecting a move into a target zone.
• Liquidity: Tight bid-ask spreads and healthy open interest on both legs.
• Volatility: Favorable skew; short leg benefits if IV compresses.
• Catalysts: Events with bounded upside (post-earnings drift, sector rotation).

Setup: Strikes, Expiration, Sizing

Strike Selection

1. Long call: ~0.50–0.65 delta (ATM to slightly ITM/OTM).
2. Short call: ~5–10% above spot (check skew/liquidity).
3. Width: Choose a spread width appropriate to budget and target zone.
4. Check fills: Use limit orders; avoid wide markets.

Expiration

• Commonly 30–60 DTE to balance theta decay and time to thesis.
• Align to your catalyst window and risk tolerance.

Risk Sizing

Max loss equals the net debit. Size positions so that a full loss is acceptable within your portfolio risk budget.

Prefer a guided workflow? Try the Bull Call Spread Calculator to visualize outcomes and compare alternatives.

Payoff, Breakeven & Greeks

• Max Profit: (Short strike − long strike) − net debit.
• Max Loss: Net debit (plus fees).
• Breakeven: Long strike + net debit.

Greeks (at inception)

• Delta: Positive; gains if price rises.
• Theta: Often slightly negative initially; improves as price approaches short strike.
• Vega: Typically negative net; IV drops can help the short leg.
• Gamma: Highest near the long strike; flattens past the short strike.

Management & Exits

• Profit taking: Consider partial or full exit ahead of expiration once your target zone is reached.
• Time-based: Many traders exit 7–10 days before expiration to reduce tail risks.
• Adjustments: Roll up/out only if the thesis remains intact and pricing justifies costs.
• Dividends/assignment: Monitor short call around ex-div dates on dividend-paying stocks.

Worked Example (Illustrative)

Underlying at $100. Buy the $100 call, sell the $110 call in the same expiry for a $3.50 net debit.

• Max profit: $10 − $3.50 = $6.50 per spread.
• Max loss: $3.50 per spread.
• Breakeven: $103.50 at expiration.

Outcomes vary based on price/IV/time. Use the calculator to test scenarios and exit rules before committing capital.

Frequently Asked Questions

Disclaimer

This page is for educational purposes only and is not investment advice. Options involve risk and are not suitable for all investors. Consider consulting a qualified professional. Examples are illustrative and exclude fees/slippage.

Sources & further reading: Cboe Options Education · OCC Investor Resources