Bull Call Spread

A call bought with a higher call sold in the same expiration: it opens for a debit and gains as the underlying rises, with both the gain and the loss capped.

Also called Long call spread, Call debit spread

Outlook

Bullish

Family

Debit Spread

Level

Intermediate

Legs

2 legs

Expirations

1 expiration

Opens for

Debit

Maximum profit

Limited

Maximum loss

Limited

Legs at the reference strikes this page's diagrams are drawn from

Leg	Side	Contract	Ratio	How the strike is chosen
A	Long	Call 100	1	At the money
B	Short	Call 105	1	5.00 points further out of the money than A

What it is

A call bought at A and a higher call sold at B, in the same expiration. The sold call pays for part of the bought one, so the structure opens for a debit smaller than the long call alone would cost — and the sale is also what puts a ceiling on the gain.

It is the same directional view as a long call, with the open-ended part sold off.

The payoff

At expiration

At expiration the position loses the full debit below strike A, rises in a straight line between A and B, and is flat at its maximum gain above B.

• Below A — both calls expire worthless and the debit is lost.
• Between A and B — the long call is in the money; the result rises linearly.
• Above B — both are in the money, the spread is worth its full width, and the gain is fixed at (B − A) less the debit.

Break-even is A plus the debit. The maximum gain arrives at B and does not grow beyond it, however far the underlying runs.

How it behaves before expiration

Today, before expiration

Today's value is a shallow curve between the two flat regions, above the expiration line at the low end and below it at the high end.

The dashed curve crosses the expiration line rather than sitting entirely on one side of it: below A the position is worth more than its terminal value because the long call still has time value, and above B it is worth less, because the short call’s remaining time value is a liability.

That crossing is why a spread deep in the money does not show its full profit until expiry: the gain is already earned and cannot be realised yet.

The Greeks

Delta is positive, peaking between the strikes and falling toward zero once both legs are deep in the money.

Gamma is positive near A and negative near B, so the position accelerates into the move and then decelerates as it approaches the cap.

Theta changes sign across the strikes: negative while the position is out of the money — time is being paid for — and positive once it is comfortably in, where the remaining value is the short leg’s.

Vega is small and changes sign for the same reason.

Where it lives in the volatility environment

Practitioners generally describe a debit spread as a way to take a directional view with less sensitivity to volatility than an outright option, because the two legs’ vega largely offset. The trade-off is the ceiling.

What can go wrong

• The move overshoots the cap. Being right by more than B − A pays exactly the same as being right by exactly that much.
• Assignment on the short call before expiry, particularly before a dividend, leaves a short share position against a long call.
• Time still costs money below A. A debit spread out of the money decays, just more slowly than a single long call.
• Both legs must be closed. A partially closed spread is a naked short call.

Building it in Option Panel

Open Build Strategy and pick Bull Call Spread. The builder seeds the long call at A and the short call at B, with strikes by delta, percentage out of the money, an offset, or an exact strike.

Back to the encyclopaedia · What-if analysis in the docs

Related strategies

• Long Call — the same view without the cap, at a higher cost.
• Bull Put Spread — the same view taken in as a credit rather than paid as a debit.
• Bear Call Spread — the same two strikes, from the other side.