Chapter 06 · Section 6.1

Bearish Call Spread Strategies

A vertical call spread is the simultaneous purchase and sale of identical call options but with different exercise prices.

To "buy a call spread" is to purchase a call with a lower exercise price and to write a call with a higher exercise price. The trader pays a net premium for the position.

To "sell a call spread" is the opposite: the trader buys a call with a higher exercise price and writes a call with a lower exercise price, receiving a net premium for the position.