What Is a Bull Call Spread?

By Matthew DiLallo – Updated Jun 16, 2025 at 12:48 PM EST

Key Points

Bull call spreads involve buying and selling call options at different strike prices.
This strategy caps potential losses to the net debit paid while also capping gains.
Used by investors expecting moderate increases in underlying stock prices.

A bull call spread or debit call spread is an options trading strategy. It's a bullish strategy that can deliver a high return on the debit paid to set up the trade. The trade caps an investor's loss potential as well as their profits.

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Bullish

Bullish means an investor believes a stock or the overall market will go higher.

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For example, an options trader believes that a slow-growing company's stock price will rise by about 5% annually over the next few years. Its share price was recently around $100 a share. They'd need to invest $10,000 to buy 100 shares. If they're correct, the stock will be worth about $110 per share in two years, growing the initial investment to around $11,000 over that period.

They believe that's too low of a return on their capital to make it a worthwhile investment. Instead, they set up a bull call spread on the same underlying stock. They buy $90 calls and sell $110 calls that expire in two years. They pay $2,000 for every $90 call they purchase and receive $1,000 for every $110 call they sell, putting their net debit at $1,000.

If shares of the company's stock rise to $110 or more by expiration, they can close the trade for the full spread value of $20 per share, or $2,000 in total. That implies they can earn a 100% return on their net debit on only a 10% gain in the underlying stock.

However, if shares close below their break-even ($100 a share in this case), they'd lose money on the trade. If shares close at or below their purchase call's strike price ($90 a share), they will lose their entire net debit.

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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Matt DiLallo has positions in Starbucks and has the following options: short July 2025 $70 puts on Starbucks. The Motley Fool has positions in and recommends Starbucks. The Motley Fool has a disclosure policy.