The Bear Call Spread

Now turn the view around. Suppose you think RELIANCE is more likely to stall or drift lower than to rally. You do not need a crash, you just doubt it climbs much from here. There is a clean, defined-risk way to get paid for that opinion, and it is the exact mirror of the bull put spread you just learned. It is the bear call spread. You collect a credit up front and keep it as long as RELIANCE stays below your strike. Same credit logic, opposite direction. Where the bull put spread profits from the stock holding up, this one profits from the stock failing to rise.

What a bear call spread is

A bear call spread has two legs, both calls, on the same expiry.

You sell the 1320 call, the leg that pays you as long as RELIANCE stays at or below 1320. Selling a call means you are paid premium today in exchange for the obligation to deliver RELIANCE at 1320 if it rises there and you are assigned. Then you buy the 1360 call at a higher strike as protection. That bought call costs back some premium, but it is the safety leg that caps your loss and turns an otherwise dangerous naked short call into a defined-risk trade.

The premium you take in for the sold call is larger than what you pay for the bought call, so you keep a net credit of about Rs 7,795 for one lot. That cash is yours on day one, and you keep all of it if RELIANCE simply does not climb above 1320.

The three numbers

Here is what the strategy builder reports for the RELIANCE bear call spread, spot near 1318, expiry 28 July 2026.

Read them in order.

• The maximum profit is Rs 7,795, exactly the net credit you collected. You keep all of it if RELIANCE closes at or below 1320 at expiry, where both calls expire worthless. This is the flat ceiling on the left of the chart, and notice you earn it just by the stock staying flat or falling.
• The breakeven is 1336. RELIANCE can rise a little, up to 1336, and you still break even, because the credit you banked absorbs the first part of any climb. Below 1336 you keep at least some profit.
• The maximum loss is Rs 12,205, suffered if RELIANCE closes at or above 1360. There the sold call is fully against you but the bought 1360 call caps the damage. This is the flat floor on the right.

Reading the chart

Walk the solid white expiry line from left to right, since this is a trade that wants the stock low.

On the left, below 1320, both calls are worthless and you sit on your maximum profit of Rs 7,795, the full credit, as a flat ceiling. As RELIANCE pushes above 1320 the sold call starts costing you, so your profit shrinks. At the breakeven of 1336, marked by the amber dot, the line crosses zero. Above 1336 you are in the red loss zone, the loss deepening as RELIANCE rises, until at 1360 the bought call kicks in and flattens the line onto its floor of Rs 12,205. Above 1360 you lose no more, because the protection leg has done its job.

The dotted cyan line is the value today, the T+0 curve, and the amber dotted vertical marks spot 1320. As with any credit trade, the dotted line drifts upward toward the solid ceiling as time passes, because every day of decay with RELIANCE still below 1320 is premium you get to keep.

Three ways expiry can play out

Walking the endings makes the shape concrete. There are three places RELIANCE can finish relative to your two strikes on 28 July 2026.

• RELIANCE closes at or below 1320, say at 1310. Both the 1320 call and the 1360 call expire worthless. Nobody assigns you, you owe nothing, and you keep the entire Rs 7,795 credit. This is your maximum profit, earned simply because the stock did not rise. This is the bet working.
• RELIANCE closes between 1320 and 1360, say at 1336. The sold 1320 call now has intrinsic value working against you, while the bought 1360 call is still worthless. The loss on the sold call eats into your credit, and at 1336 it eats exactly all of it. That is why 1336 is your breakeven. Below 1336 you keep part of the credit, above it you begin to lose.
• RELIANCE closes at or above 1360, say at 1380. Both calls now carry intrinsic value. The sold 1320 call costs you 60 points, but the bought 1360 call earns back 20 points, leaving a net 40 points against you, the full strike width worth Rs 20,000. Subtract the Rs 7,795 credit and your loss is capped at Rs 12,205, the maximum loss. Above 1360 it gets no worse, because the protection leg matches every further point.

That third scenario is where the bought 1360 call proves its worth. Without it, a runaway rally in RELIANCE would keep costing you with no ceiling on the damage at all.

The mirror of the bull put spread

It is worth holding the bear call spread and the bull put spread side by side, because they are reflections of each other across the spot price.

• The bull put spread sells puts below the money and profits when RELIANCE holds up. Its breakeven sits below spot, at 1304.
• The bear call spread sells calls above the money and profits when RELIANCE stays down. Its breakeven sits above spot, at 1336.

Both are credit trades, both are defined-risk thanks to a bought protective leg, and both share the same shape, a flat profit ceiling on the side you favour and a flat loss floor on the side you fear. The only real difference is direction. One leans bullish, the other bearish. If you understand one, you understand both, which is the quiet beauty of learning strategies by their shapes rather than their names.

Be honest about the risk

A bear call spread, like every credit trade, risks more than it can make. Here you risk Rs 12,205 to earn Rs 7,795, and the loss arrives if RELIANCE rallies past your strikes. Because the cash comes in on day one and you win simply by the stock not rising, it is easy to feel safe and to oversize. Do not. One sharp upside move in RELIANCE can hand back several quiet winners at once, so treat the maximum loss as the real number that governs your position size.

The bought 1360 call is what keeps this trade survivable. A sold 1320 call on its own, with no protection, is a naked short call, and a stock can in theory rise without limit, so the loss has no floor at all. Never run the short leg alone in the hope of pocketing the whole premium. The protective long call is the entire difference between a defined-risk spread and an open-ended one that can do real harm.

You have now learned four complete strategies and both ways to express a directional view, paying a debit or collecting a credit. The bull call spread, bull put spread, and bear call spread give you a bullish and a bearish tool in each style, all defined-risk, all readable from their three numbers. From here the course moves on to strategies that bet not on direction but on movement itself, starting with what happens when you expect a big swing in either direction.