What is a bull call spread?
A bull call spread is two legs in one expiration. You buy a call at a lower strike and sell a call at a higher strike. The trade costs a net debit.
The short call pays for part of the long call. That lowers your cost and your breakeven, and it stops your profit at the higher strike. Risk is limited to what you paid.
When traders use it
Traders use it when they want upside exposure with a known cost and a modest target.
- You expect a move up to a level, not an open-ended run.
- A single long call looks too expensive for the move you expect.
- You want the maximum loss fixed before you enter.
The P/L shape
The payoff is a rising ramp between the two strikes, flat outside them. Both ends are fixed on the day you enter.
Worked example. XYZ trades at $100. You buy the $100 call and sell the $110 call for a net debit of $3.50, or $350.
- Max profit
- $650 — the $1,000 strike width minus the $350 debit
- Max loss
- $350 — the debit, if XYZ closes at or below $100
- Breakeven
- $103.50 — lower strike plus the debit
At $110 or above you make the full $650. Between $100 and $110 the result slides between the two. The stock has to clear $103.50 by expiration just to break even.
Greeks and time decay
Net delta is positive but smaller than the long call on its own, because the short call offsets part of it. Delta is highest when the stock sits between the strikes.
Theta is against you while the stock is below the long strike — you paid a debit and time erodes it. Once the stock is above the short strike, time decay starts working in your favour, pinning the spread toward its full width.
Build it in DeltaForm
- Open the builder and choose the symbol and expiration.
- Add a long call at the lower strike.
- Add a short call at the higher strike, same expiration.
- Check the debit, then read the breakeven off the payoff curve.
- Step the date forward to see how fast the spread converges to its width.
Frequently asked questions
How is this different from just buying a call?
It costs less and breaks even sooner, but it stops earning above the short strike. A long call keeps going. If you expect a large move, the spread will leave money behind.
How far apart should the strikes be?
Wider strikes cost more and pay more; narrower strikes cost less and cap sooner. Model a few widths on the same expiration and compare breakeven against maximum profit.
What happens if only one leg is exercised?
That is early assignment on the short call, most likely around a dividend. Your long call still protects the position, but the mechanics land in your brokerage account. DeltaForm models the trade; it does not connect to a broker.