A bull call spread is a two-leg debit strategy: you buy a call and sell a higher-strike call of the same expiry. It profits from a moderate rise, and — crucially — your maximum loss is fixed at the net premium (debit) you pay.
The structure
- Buy 1 ATM/near call (costs premium)
- Sell 1 higher-strike OTM call (collects premium, caps the upside)
| Metric | Formula |
|---|---|
| Net debit (max loss) | Long premium − short premium |
| Max profit | (Strike gap × lot) − net debit |
| Breakeven | Long strike + net debit per share |
Worked example (NIFTY)
Buy 24450 CE @ ₹107, sell 24850 CE @ ₹42 → net debit ₹65/unit. On a 65-lot that's a max loss of ~₹4,240. If NIFTY expires at/above 24850, max profit = (400 − 65) × 65 ≈ ₹21,775 — about a 5:1 reward-to-risk, with the loss capped.
Why spread instead of a naked call? A naked long call can lose its entire premium; a spread lowers the cost, defines the risk, and needs less margin. The trade-off is a capped upside.
When to use it
- You're moderately bullish (expect a move, not a moonshot)
- IV is elevated and you want to reduce the premium outlay
- You want a known, fixed maximum loss
Build a bull call spread in House of Trading and see the live payoff, breakeven and defined-risk margin before you place it on your own broker.