- Buy a call, sell another call at a lower strike
- Credit spread
- Max profit = credit received
- Max loss = Difference between strikes - credit received
- Max profit below lower strike, max loss above higher strike
- Usually larger credit means more aggressive position since it means the short call is deep in the money and stock will need a larger downward movement for profit
- Less aggressive position will involve short call out of the money. The position will make money even if stock stays at current price.
- A bear spread using puts might be a better strategy