A bull call spread buys one call and sells another call at a higher strike. The long call gives upside. The short call helps pay for it. In exchange, your profit is capped above the higher strike.
This is often a better trade than buying a call when you expect a move to a target, not an unlimited moonshot.
Bull call spread payoff
Lower cost than a long call, with capped profit above the short strike.
Example shown: buy 100 call, sell 115 call, net debit 4.
Works best when the target is near the short strike.
When it fits
Use a bull call spread when you are bullish but price matters. If calls are expensive or you have a realistic upside target, selling the higher call can reduce cost and improve the break-even point.
Choosing strikes
A simple structure buys a call near the current stock price and sells a call near the target. The spread's maximum value is the distance between strikes. Your maximum loss is the net debit paid.
- Wider spread: more upside, higher cost.
- Narrower spread: cheaper, but less room to profit.
- Short strike near target: matches the trade to the thesis.
Exit plan
If the spread reaches a large portion of max value early, consider closing. Waiting for the last few cents can leave you exposed to reversal risk for little extra reward.
Execution playbook
Use this section to turn the setup into a broker-screen plan: selection, follow-up action, risk limits, and reasons to skip the trade.
Key execution ideas
- Bull spreads can be ranked by aggressiveness, cost, and target price.
- The short call turns vague bullishness into a specific upside target.
- Follow-up action focuses on whether remaining reward justifies continued risk.
Before entering the order
- Buy the call that gives enough responsiveness to the expected move.
- Sell the higher call near the price target or resistance zone.
- Check max value, debit paid, break-even, and reward-to-risk before sending the order.
Follow-up action
- Take profit if the spread reaches most of its max value early.
- Exit if the stock breaks the bullish setup.
- Avoid holding to expiration for a tiny remaining gain when reversal risk is still present.
Skip the trade when
- Your thesis requires unlimited upside participation.
- The spread is too narrow to justify commissions, slippage, or effort.
- The short call would cap the trade before the real target.
Options can lose money quickly. Treat every setup as a defined plan: entry, maximum loss, adjustment trigger, exit target, and a reason to skip the trade when pricing is not favorable.