A short call spread has a setup of selling 1 call option, generally out the money and buying 1 call option further out the money. For this to be a true short call spread, it is executed with a net credit. If it is a net debit, then it's a long call spread. A trader will implement this strategy if they are bearish on the stock, but want to limit their max risk because if they were to not buy the call option, then this would be a naked call, that has max risk to be unlimited.
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Option Contracts
Short Call
Long Call
Equity - Short
100 shares
Estimated Returns
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