Call option bear spread
That is, you take in income at the outset of this trade. If the forecast is wrong and the stock rallies instead, the losses grow only until the long call caps the amount. The maximum loss occurs when the stock trades at or above the strike price of the long call. Navigation Main page Contents Featured content Current events Random article Donate to Wikipedia Wikipedia store. In that case, the investor will be assigned on the short call, now deep-in-the-money, and will exercise the long call. Arbitrage Bearish Bullish Neutral - Bearish on Volatility Neutral - Bullish on Volatility Profit Potential: Copyright FMR LLC.