Wednesday 10 Jun 2026. The Nifty 23,250 call settled at 321.65 a unit. One lot of 65 units cost Rs 20,907. The 23,450 call settled at 226.65. Sell the second to pay for part of the first and the net bill is 95.00 a unit, Rs 6,175 a lot, under a third of the call alone. On Tuesday 30 Jun Nifty closed at 23,865.75. The plain call made Rs 19,117 a lot. The spread made Rs 6,825. That is the whole trade: you pay less, and you give away the top. I like a trade whose worst day I can write down before I place it. A vertical spread is that trade. Every figure comes from NSE end of day files of 10 and 30 Jun 2026, so nothing here is live.
3By the end you can
- Read the net debit, breakeven, maximum gain and maximum loss of a bull call or bear put spread.
- Work out the cost of one lot from two dated settlement prices.
- Say what a spread gives up against a single option, and which charge falls on a long leg at expiry.
The idea, plainly
Think of selling part of your upside. You buy a call that pays above 23,250. Then you sell a second call at 23,450 to someone else. They paid 226.65 a unit on 10 Jun. In return they keep everything the index earns above 23,450. You have swapped the top of the payoff for cash now.
What is a bull call spread?
Buy a call at a lower strike. Sell a call at a higher strike. Same expiry, same lot. The premium you pay less the premium you receive is the net debit, money out of your account. The most you can lose is that debit. The most you can make is the gap between the strikes less the debit. It earns when the index rises, up to the higher strike.
Bull call spread
Max loss = net debit
Max gain = gap less debit
Breakeven =
low strike + debit
Both the loss and the gain stop at the two strikes
Read one more paragraph, 41 words
Read the smooth curve too. Before expiry the spread is worth a little less than its full gap even above the higher strike, because both calls still carry time value. The corners round off. Only at expiry do they become sharp.
What is a bear put spread?
The mirror. Buy a put at a higher strike. Sell a put at a lower strike. It earns when the index falls, down to the lower strike, and it loses the debit if the index finishes above the higher one.
Bear put spread
Max loss = net debit
Max gain = gap less debit
Breakeven =
high strike − debit
The bear put spread is the bull call spread turned over
Why use a spread and not one option?
It costs less, so the loss when the index goes nowhere is smaller. The sold leg also cancels much of the time decay and the swing in volatility that a lone option carries. The price is the cap. Whatever the index does beyond the sold strike is not yours.
What does a spread cost in India?
- Premium. The net debit is paid upfront. SEBI's circular of 1 Oct 2024 made upfront collection of the net option premium the rule from 1 Feb 2025.
- Margin. The sold leg needs margin. The bought leg caps its risk, so SPAN, the margin model of NSE Clearing, asks for less than on the sold call alone. The exact rupees change with the position and through the day.
- STT, at the rates in force from 1 Apr 2026. 0.15% of the premium when the sold leg is sold. On a bought leg left to expiry in the money, 0.15% of its whole intrinsic value, not of the net gain. Module F16 covers it.
Worked example: 10 to 30 Jun 2026
The June chain of 10 Jun 2026: the future settled at 23,240.10, and the monthly expiry was Tuesday 30 Jun, settled on the index close for expiries before 7 Dec 2026. Lot size 65. The bought call is the strike nearest the future, 23,250. All prices are settlement prices, which are not fills: a real order pays a bid and ask on each leg.
Two prices become one debit, and the debit is the most you can lose
| One lot | Call alone | Bull call spread |
|---|---|---|
| Net premium, a unit | 321.65 | 95.00 |
| Cost, also the most it can lose | Rs 20,907 | Rs 6,175 |
| Most it can make | No cap | Rs 6,825 |
| Breakeven at expiry | 23,571.65 | 23,345.00 |
| Result at the 30 Jun close of 23,865.75 | Rs 19,117 | Rs 6,825 |
| One lot | Bear put spread |
|---|---|
| Net premium, a unit | 82.80 |
| Cost, also the most it can lose | Rs 5,382 |
| Most it can make | Rs 7,618 |
| Breakeven at expiry | 23,167.20 |
| Result at the 30 Jun close | −Rs 5,382 |
Read 4 more paragraphs, 201 words
The bear put spread on the same chain buys the 23,250 put and sells the 23,050 put.
Nifty rose 2.8% in twenty days. The bull call spread made its maximum, Rs 6,825, because the close was above both strikes. Per rupee spent it returned 110.5%, the plain call 91.4%. The call made more rupees a lot. The spread made more per rupee at risk. The bear put spread lost the whole Rs 5,382, since both of its puts finished worthless.
Then the charges. The sold call's STT is Rs 22.10. The bought call finished 615.75 points in the money and was exercised for its holder, so STT of 0.15% fell on that whole amount: Rs 60.04. That is Rs 82 in all, 1.2% of the gain, before brokerage and exchange charges. If the long leg is sold before expiry, STT falls on the premium it sells for instead.
One month shows the shape and nothing about odds. Had Nifty closed at 23,250 instead, the plain call would have lost its Rs 20,907 and the spread its Rs 6,175. At or below the lower strike both lose everything they cost. The spread simply costs less.
The common mistake
The belief: A spread has a capped loss, so it is a safe trade.
Capped is not small. The cap is the whole debit, and the debit goes when the index finishes on the wrong side of the bought strike. On 30 Jun 2026 the bear put spread lost all Rs 5,382, every rupee it cost, because Nifty closed 615.75 points above its bought 23,250 put. A defined loss tells you the worst case before you trade. It does not tell you how likely the worst case is. The questions that matter are how large the debit is against the account, and how far the index must travel to reach the breakeven, 23,345.00 for the bull call spread.
The term this section turns on: Breakeven
Key takeaways
- A vertical spread buys one option and sells another of the same type.
- Loss stops at the net debit. Gain stops at the gap less the debit.
- The spread costs less than the lone option and gives up the top.
- Capped is not safe: the whole debit was lost in the bear put spread.
- STT falls on a long leg exercised at expiry, on its whole intrinsic value.
- Settlement prices are not fills: each leg pays its own bid and ask.
Before you trade. Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. Read the SEBI study