Posted on March 9th, 2010 
admin
It is essential to understand the option pay-off diagram for the option strategy you are trading. It allows you to know to determine at what share price you achieve maximum profit, maximum loss and breakeven level at expiry. The bear call spread is made up of a sold call option and a bought call option at a higher strike. When combined it creates a bear call spread. See below for how the bear call option pay-off diagram is constructed. The dotted green line is the sold call and the dashed green line represents the bought call.
Sold Call
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Bought Call
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Bear Call Spread
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