Bear call Spreads benefit when the price of the Underlying instrument falls because the Short Call reduces in value and is, therefore, cheaper to buy back (and might subsequently expire at zero). Even if the price of the Underlying rises, providing the market price of the instrument remains below the Strike Price of the Short Call then it is worthless at expiry and the option seller gets to keep all of the Premium they collected when the position was opened. For this reason, Bear call Spreads are sometimes described as being partially non-directional.
See the Profit & Loss diagram of the Bear Call Spread strategy at Option Creator
XYZ is currently trading at $170
Short 1 x Out Of The Money $180 Strike Call for 2.82 = $282 credit
Long 1 x Out Of The Money $190 Strike Call for 0.86 = ($86) debit
Net credit received = $196
All options expire with XYZ still trading below $180
Short 1 x $180 Strike Put is worthless = ($0)
Long 1 x $190 Strike Put is worthless = ($0)
The trader keeps the $196 credit received. This is the total amount of profit available, irrespective of whether the price had fallen any lower.
Options expire with XYZ trading above $190
Short 1 x $180 Strike Call is now worth 17.5 = ($1750) debit
Long 1 x $190 Strike Call is now worth 7 = $700 credit
The trader incurs a loss of ($1050) which is offset by the credit received of $196 to reduce the liability to ($854). This is the total amount the trader can lose.
External LinksBear Call Spread (Credit Call Spread)
OIC guide to Bear Call Spreads.Bear Call Spread
Options Guide Bear Call Spread explanation with an example.