⚡ Bear Call Spread Playbook
→Sell at 45 DTE, where theta decay starts to accelerate meaningfully
→Close at 50% of max profit — don't be greedy
→Manage or roll at 21 DTE regardless of P&L
→Size to 1–5% of portfolio per trade
→Target short strikes near a 70–80% probability of expiring OTM
→Sell premium in high IV environments (IVR > 30) for better credit
What Is a Bear Call Spread?
A bear call spread is the mirror of the bull put spread: a defined-risk credit strategy for a neutral-to-bearish outlook. You sell a call at a lower strike and buy a further out-of-the-money call at a higher strike, collecting the net premium as a credit. The trade profits as long as the stock stays below your short call strike through expiration — you don't need the stock to drop, just to avoid rallying through your short strike.
The long call caps the maximum loss at the strike width minus the credit received, turning what would otherwise be an undefined-risk naked call sale into a defined-risk position.
Worked Example
Using the calculator's default inputs
SPY at $580, selling the $595 call for $3.80 and buying the $605 call for $1.60, both 45 DTE:
- Credit received: $220 per spread (($3.80 − $1.60) × 100)
- Strike width: $1,000 (($605 − $595) × 100)
- Max profit: $220 — kept in full if SPY closes at or below $595
- Max loss: $780 (strike width minus credit) if SPY closes at or above $605
- Breakeven at expiration: $597.20 ($595 short strike + $2.20 net credit)
Frequently Asked Questions
Does the stock need to fall for a bear call spread to profit?
No — the position profits if the stock stays below the short call strike at expiration, including scenarios where it drifts up slightly but not through your short strike.
What's the main risk of a bear call spread in a strong rally?
If the stock closes above the long call strike, you take the maximum loss — strike width minus credit received. The long call is what stops the loss from growing further.
Why might a trader choose 45 DTE for a bear call spread?
45 days to expiration is where theta decay — time-value erosion, which benefits credit sellers — starts to accelerate meaningfully, while still leaving room to manage the trade if the stock moves against you early.
What does "probability of touch" mean when picking strikes?
It's the estimated chance the stock trades at or through your short strike at any point before expiration — higher than the probability it finishes there, since it accounts for the whole life of the trade, not just the final price.