Both long call spreads (bull call spreads) and short put spreads (bull put spreads) are bullish strategies with similar risk profiles. Understanding their differences helps you choose the right one for each situation.
The Two Strategies
Long Call Spread (Bull Call Spread)
- Buy a call at lower strike
- Sell a call at higher strike
- Pay a debit upfront
- Profit if stock rises above lower strike
Short Put Spread (Bull Put Spread)
- Sell a put at higher strike
- Buy a put at lower strike
- Receive a credit upfront
- Profit if stock stays above higher strike
Key insight: At the same strikes and expiration, these strategies have nearly identical risk/reward profiles. The difference is in the mechanics and when they work best.
Key Differences
Cash Flow
- Long call spread: You pay upfront (debit)
- Short put spread: You receive payment upfront (credit)
Time Decay (Theta)
- Long call spread: Time decay works against you
- Short put spread: Time decay works for you
Where Stock Needs to Be
- Long call spread: Stock must rise above lower strike to profit
- Short put spread: Stock just needs to stay above higher strike
Comparison Example
Stock at $100. Both strategies use 100/105 strikes.
Long Call Spread:
- Buy $100 call, sell $105 call
- Pay $2.00 debit
- Max profit: $3.00 (if stock above $105)
Short Put Spread:
- Sell $105 put, buy $100 put
- Receive $3.00 credit
- Max profit: $3.00 (if stock above $105)
Same max profit, different mechanics.
When to Use Long Call Spread
- You expect the stock to move higher
- IV is relatively low (buying options is cheaper)
- You want defined risk with no assignment risk
- You prefer paying upfront and having no further obligations
When to Use Short Put Spread
- You expect the stock to stay above a level or rise slowly
- IV is elevated (selling options for more premium)
- You want time decay working in your favor
- You can accept early assignment risk
Volatility Considerations
- High IV: Favor short put spreads (collect inflated premium)
- Low IV: Favor long call spreads (pay less for options)
- IV crush expected: Short put spread benefits
- Big move expected: Long call spread may be better
Assignment Risk
Short put spreads carry early assignment risk:
- If the short put goes ITM, you may be assigned stock
- This ties up capital and changes position profile
- Long call spreads have no assignment risk
Track Your Spread Trades
Pro Trader Dashboard helps you analyze which spread strategies work best for your trading style.
Summary
Long call spreads and short put spreads are both bullish strategies with similar payoffs. Choose long call spreads when you expect movement and IV is low. Choose short put spreads when you want time decay working for you and IV is elevated. Consider assignment risk and your cash flow preferences when deciding.