Buy a call at the lower strike and sell a call at the higher strike. Profit and loss are both capped, at a lower cost than a Long Call alone.
The structure
A Bull Call Spread buys a nearer call and sells another with a higher strike, same expiration. The sold call lowers the cost and caps the profit, so it becomes a bullish bet with both ends defined.
When to use it
A bullish view toward a defined target, not an open-ended surge: the target itself becomes the upper strike. It makes the most sense when implied volatility is high, because the sold leg recovers part of the premium the bought leg pays.
Maximum profit and loss
Maximum loss is the net amount paid. Maximum profit is the gap between the two strikes minus what you paid. Breakeven is the lower strike plus the net cost. Every number is known before you enter.
Hypothetical example
A stock at $100: buy a call with a $100 strike for $4 and sell a call with a $110 strike for $1.50. Net cost $2.50, maximum profit $7.50 above $110, breakeven $102.50. A reward-to-risk ratio of three to one, known up front.
Common mistake
Narrowing the gap between the two strikes squeezes the profit: a small saving in cost is paid for with a cap close to breakeven. Set the gap from the real target of the idea, not from the wish for the cheapest ticket.
Why it softens three enemies
The cost is lower (the sold call funds part of it). Theta is kinder (the sold leg decays in your favor). And volatility crush hurts less (the two legs partly offset). In return you accept a fixed profit cap. That trade works well when the expected move is limited anyway.
Where to see it on the platform
The strategies tab in the options calculator builds it ready-made with its profit chart and the three key numbers, and the selection guide suggests it for rising markets with cheap volatility.
The calculator works out the net payment and breakeven, and the strategy guide suggests it when volatility is expensive.
