Bull Call Spread
Buying a call at one strike and writing a call at a higher strike with the same expiry, capping both cost and gain.
Formula
Net Debit = Lower Strike Premium - Higher Strike Premium; Maximum Gain = (Strike Difference - Net Debit) x Lot Size
Unit
₹
In depth
The written call subsidises the purchased one, which reduces the outlay, the break-even and the time decay, at the cost of capping the gain at the higher strike. This makes the position a bounded bet in both directions and considerably less exposed to the total loss that a lone long call so often produces. Margin is required because one leg is written, though the offset means it is far less than for a naked short. The structure is a definition of a payoff, not a recommendation, and it loses its entire debit if the underlying finishes below the lower strike.
Worked example
Buy a 24,000 call at 300 and write a 24,400 call at 150: net debit 150, or ₹11,250 per lot. Maximum gain is (400 - 150) x 75 = ₹18,750, break-even is 24,150, and below 24,000 the full ₹11,250 is lost.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Bull Call Spread” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.