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Bear call credit spread

STO (sell to open) a lower call and BTO (buy to open) a higher call. Collect a credit. Flatten with BTC (buy to close) and STC (sell to close).

Call-side twin of the bull put. STO (sell to open) an OTM (out of the money) call, BTO (buy to open) a further OTM (out of the money) call. You want the stock below the short strike. Max loss is the width minus the credit. Not a naked short call.

MSFT $420. STO (sell to open) $430 call at $3.50, BTO (buy to open) $440 call at $1.50. Credit $2. Stay below $430: keep $200. Rip through $440: lose about $800.

The lab is that call credit. Slide through $430 and $440. Together with a bull put, this is an iron condor.

Bear call — credit if the stock stays downSell a call, buy a higher call as a wing. Twin of the bull put. Not a naked short call.Bear call — credit if the stock stays downTeaching sketchshort K · keep creditwingmax loss defined
STO $430 call, BTO $440 call, credit $2. Stay below $430: keep $200. Rip through $440: lose about $800.

Teaching lab

Short lower call, long higher call

MSFT $420. STO $430 at $3.50, BTO $440 at $1.50. Credit $2. You want the stock down.

P/L / share
-1.17
×100
-117
Delta
-0.118
Gamma
-0.0016
Theta / day
+0.0292
Vega / vol pt
-0.0563

P/L / share

vs the lesson entry

1.690.00-5.83$380$400$420$440$460

Delta

share-equivalent

-0.026-0.128$380$400$420$440$460

Gamma

peaks near the strikes

0.00230.0000-0.0027$380$400$420$440$460

Theta / day

clock

0.0410.000-0.037$380$400$420$440$460

Vega / vol pt

fear priced in

0.1000.000-0.089$380$400$420$440$460

Rho / rate pt

small at 30 days

-0.008-0.041$380$400$420$440$460

Keep $200 below $430. Rip through $440: about −$800. Teaching only.

Next: iron condor (this plus a bull put)

Tickets for this structure

BTO (buy to open) · STO (sell to open) · BTC (buy to close) · STC (sell to close). Illustrative fills only. We never send these orders.

STO (sell to open)

Open a short

Sell to open (short call)

MSFT $420. STO (sell to open) 1× 30-DTE (days to expiration) $430 call at $3.50. You want MSFT below $430.

BTO (buy to open)

Open a long

Buy to open (wing)

BTO (buy to open) 1× 30-DTE (days to expiration) $440 call at $1.50. Credit $2. Max gain $200. Max loss $800. BE $432.

BTC (buy to close)

Close a short

Buy to close (short call)

Close: BTC (buy to close) the $430 with STC (sell to close) the $440. BTC (buy to close) only the short and you are left long the $440.

STC (sell to close)

Close a long

Sell to close (wing)

Finish $425: both die, keep $200. Finish $450: spread ≈ $10, lose about $800.

With the bull put, this is an iron condor

Short OTM (out of the money) put spread plus short OTM (out of the money) call spread = iron condor. Each credit vertical can stand alone. Earnings inside the DTE (days to expiration) is a common reason to stand aside rather than STO (sell to open) a new short call.

How the Greeks move

Short lower call plus long higher call: negative delta, you collect theta. Slide through $440: the wing caps the loss. Not a naked short call.

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Teaching numbers only — not a live quote, not a fill, not financial advice. All lessons · Back to Practice · Replay · Journal.