A bull call spread gains between its two strikes, then stops gaining above the upper one
Both are vertical debit spreads: two options of the same type and expiry, one bought and one sold at different strikes. The buyer pays a net premium, which is the most the position can lose. The sold option lowers the cost and also caps the gain, so the trade gives up some upside to reduce the entry cost.
The chart draws a bull call spread on the 30 Jun 2026 Nifty chain. It buys the at the money call and sells the call four strike steps higher, priced at the settle prices of 10 Jun 2026, for one lot of 65 units. The loss is limited to the net premium, the gain is limited to the gap between the strikes less that premium, and the breakeven sits between the two strikes.
A bear put spread mirrors it. It buys a put at the higher strike and sells a put at the lower one, so the gain grows as the index falls toward the lower strike. The maximum loss is again the net premium, and the maximum gain is the strike gap less that premium.
Both spreads are directional. The premium collected on the short leg does not protect against a wrong direction. The strikes set the cost, the breakeven and the cap, and a wider spread costs more and gives a larger maximum gain and loss. The collar and put spread page compares the same idea with a stock holding.
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