In a Bear Call spread,
What happens when the strike prices are near to each other?
Ii.e.
say CMP 16000
Bearish outlook
Sell 16000 CE
Buy 16050 CE
Please share your views.
Very nice question

i has very limited knowledge of option, but i tries to answer

for bear call spread, as person is expecting market to fall or remain sideways, they usually short the ATM or ITM call n buy the OTM call....

as u is buying n shorting OTM calls, this combination a bit different
option startagies is limited to person's creativity




so all combination is nice as long as it make profit

using friday prices, this is output.... very close strikes will give small profit n risk reward also not favourable

as u have shorted 16000CE, means u is expecting market to expire below 16000

here 16011 is breakeven point, at 16000 and below u get 11 points profit
using 15700 and 16050 is what most people do for bear call spread, now R:R also less risky than earlier, here 15827 is breakeven point, as long as expiry below it, there is profit
as u want to use very close strike price, as spot is at 15700, using 15700 and 15750 give favourable R:R

but now breakeven is 15727
if someone asks me what i dids in this scenario, i is simply opens bull call spread, as i expects market to fly till 16000 n once it reach 16000, i close positions or opens new positions and locks in porfits




i thinks u must not uses bear call spread

or u must uses bear call spread when market at 16000

all this just my suggestion, please trading only after testing proper