HEDGING STRATEGIES

BEARISH OPTION STRATEGIES

BEAR CALL SPREAD

A Bear Call Spread is a bearish option strategy that works in the same way a Bear Put Spread does, profiting when the underlying stock drops. Establishing a Bear Call Spread involves the purchase of an Out of The Money call option on the underlying asset while simultaneously selling an In the Money or At The Money call option on the same underlying asset with the same expiration month . 

Sell ATM Call  +  Buy OTM Call

Risk / Reward of Bear Call Spread: Upside Maximum Profit is Limited , Maximum Loss is Limited 

Break Even Point of Bear Call Spread : Lower Strike + Net premium received

Bear Call Spread is a credit spread, you also make money if the underlying asset stays stagnant through the decay and expiration of the more expensive short call options.