Options Directional
Bull Call Spread / Bear Put Spread
Buying a call or put outright costs the most and caps nothing. Selling a further-out option against it turns the trade into a debit spread: cheaper to enter, capped on both ends. The question is always how much upside got given away to pay for that discount.
Drag the strikes, toggle the comparison
Drag the two gold handles to set the bought strike and the sold strike. Flip the comparison switch on and a second line appears showing what buying the single option alone, with no spread, would have cost and paid off.
Drag the two gold circles · underlying starts at $100
How it works
- Buy the closer strike, sell the farther one, same expiration, same direction. A bull call spread buys a call and sells a higher-strike call. A bear put spread buys a put and sells a lower-strike put. Both are still directional bets, just funded partly by the option that got sold.
- The sold leg pays for part of the bought leg. That's the entire reason the debit is smaller than buying the single option alone, drag the sold strike closer to the bought strike and watch the debit shrink because the premium collected on the short leg goes up.
- Max profit is capped at the strike width minus the debit. Unlike a single long call or put, there's a ceiling. Once the underlying passes the sold strike at expiration, more movement in your favor doesn't add another dollar of profit.
- Max loss is capped at the debit, and only the debit. That's true of the single leg too, but the debit itself is smaller here, so the dollar amount actually at risk on the spread is lower than the dollar amount at risk buying the option alone.
Where this breaks
The cap costs real money if the move runs far
Drag the sold strike in tight against the bought strike. The debit drops and the trade gets cheap, but the profit ceiling drops with it, sometimes to almost nothing. Toggle the single-leg comparison on with the strikes set this way and the gap between the two lines on the far side of the chart shows exactly what got left on the table. A debit spread is a trade of unlimited upside for a lower entry cost, not a strictly better version of the single option.