Vertical spreads
What is a Bear Call Spread (Credit Call Spread) and how do I use it to fade structural resistance?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A bear call spread involves selling a call at a lower strike and buying a call at a higher strike for protection, collecting a net credit and profiting if the stock stays below the short strike, often used to fade perceived resistance levels with limited, defined risk.
How it works
The long call caps maximum loss at the difference between strikes minus the credit collected, offering a defined-risk alternative to selling naked calls for traders expecting a stock to stay below a certain level.
An example
Selling a $55 call for $2 and buying a $60 call for $0.60 creates a $1.40 net credit, with maximum loss capped at $3.60 if the stock rises above $60.
Risk & limitations
OIC cautions that resistance levels can be broken unexpectedly on strong news, and the strategy still carries meaningful loss potential within the defined range.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.