Bear spread

In options trading, a bear spread is a bearish, vertical spread options strategy that can be used when the options trader is moderately bearish on the underlying security.

Because of put-call parity, a bear spread can be constructed using either put options or call options. If constructed using calls, it is a bear call spread. If constructed using puts, it is a bear put spread.

Bear call spread

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 security with the same expiration month.

Example

Consider a stock that costs $100 per share, with a call option with a strike price of $105 for $2 and a call option with a strike price of $95 for $7. To implement a bear call spread, one