Here's the question that trips up most spread traders: I'm bullish on a stock. Should I sell a put spread or a call spread? Both can profit from bullish moves, but they're fundamentally different bets.

Let me walk you through the mechanics, then show you how to choose.

Analyze your spread legs: Use our Strategy Analyzer to evaluate covered calls (for call spreads) and cash-secured puts (for put spreads). Compare premiums and assignment probabilities to build the right spread for your outlook.

The Setup: Put Spread vs Call Spread

Put Credit Spread (Bullish Play)

Mechanics:

Sell 1 put at $100 strike (collect premium, e.g., $2)
Buy 1 protective put at $95 strike (pay premium, e.g., $0.50)
Net credit: $1.50
Max loss: $500 - $150 = $350 (the width of the strikes minus the net credit)

Breakeven: $100 - $1.50 = $98.50

If the stock stays above $98.50, you profit. If it drops below $95, you max lose.

Call Credit Spread (Bearish/Neutral Play)

Mechanics:

Sell 1 call at $110 strike (collect premium, e.g., $2)
Buy 1 protective call at $115 strike (pay premium, e.g., $0.50)
Net credit: $1.50
Max loss: $500 - $150 = $350 (same as put spread)

Breakeven: $110 + $1.50 = $111.50

If the stock stays below $111.50, you profit. If it rallies above $115, you max lose.

Side-by-Side Comparison

Let's use SPY at $450 as the example:

Feature	Put Spread (Bullish)	Call Spread (Bearish/Neutral)
Setup	Sell $445 put, Buy $440 put	Sell $455 call, Buy $460 call
Max Profit	$150 (if SPY > $445)	$150 (if SPY < $455)
Max Loss	-$350 (if SPY < $440)	-$350 (if SPY > $460)
Breakeven	$443.50 (sell strike - credit)	$456.50 (sell strike + credit)
Win Rate	~75% (need SPY to stay up)	~75% (need SPY to stay flat/down)
Capital Required	$350-500 margin (buying power)	$350-500 margin (buying power)
Risk Direction	Down (assignment if stock drops)	Up (assignment if stock rallies)
Ideal Market	Bullish or consolidating	Bearish or consolidating
IV Preference	Lower IV is OK	Prefer high IV (benefit from crush)

The Real Decision: When to Use Each

Use Put Spreads When:

1. You're Bullish or Neutral You think the stock will hold support or move higher. Put spreads profit if the stock holds or rises. They lose only if it breaks down below your lower strike.

Example: SPY has bounced off $440 three times in the past month. You think it holds again.

Sell $445 put spread
Profit if SPY > $445
Risk: SPY breaks $440 support

2. You Want to Capture Dividends (Indirectly) Put spreads don't capture dividends directly, but they benefit from stocks rallying to cum-dividend dates.

Example: JPM dividend is coming. You expect a $1 move up into the ex-date.

Sell $170 put spread, collect $1.50
Stock rallies $1 on dividend anticipation
Spread already profitable before expiration

3. IV is Low (Not Ideal, but Sometimes Necessary) When IV percentile is 20% (crushed), put spreads have tighter time decay but sometimes the market is offering value on puts (sellers are demanding premium to buy insurance).

Example: Tech has crushed to all-time lows in volatility. A put spread at delta 0.30 might still offer 0.8% premium.

Not great, but beats sitting in cash

4. You Want Directional Bias But Don't Own the Stock PMCCs and covered calls require stock ownership. Put spreads let you capture income and be bullish without owning shares.

Example: You're bullish on $200 MSFT but don't want to tie up $20,000 in stock.

Sell $195 put spread, deploy $500 margin
If MSFT holds, you keep the credit
If assigned, you own shares at $195 (and can sell calls)

Use Call Spreads When:

1. You're Bearish or Expect a Pullback Call spreads profit if the stock stalls or declines. They lose if the stock rallies past your upper strike.

Example: A stock has rallied 20% in 3 weeks. You expect a pullback or consolidation.

Sell $510 call spread (sell $510, buy $515)
Profit if stock < $510 at expiration
Risk: Stock rallies above $515

2. IV is Richest on Call Spreads Here's a subtle point: after a stock rallies hard, call spreads are the most expensive (highest premiums available). Put spreads are cheapest (why would someone buy downside insurance on a rip?).

If you're selling premium opportunistically, high IV on calls = better reward.

Example: Nvidia just rallied 15% on earnings. Call IV is sky-high.

Sell $500 call spread (gets $3+ premium)
Put spreads might only get $0.50 premium
You want the call spread because the premium is richer

3. You Want to Sell After a Spike (Post-Earnings, Post-News) Call spreads are ideal right after a stock spikes. Sell the calls at peak IV, then watch IV crush as the news ages and theta accelerates.

Example: Company reports guidance beat. Stock rallies 8%.

Sell call spread at $5 premium (elevated)
Over next 3-5 days, IV falls, premium collapses
Close for profit before assignment risk rises

4. You Already Own the Stock (But Want Extra Income) If you own 100 shares of MSFT, selling a call spread on those shares is more efficient than selling a naked call.

Example: You own 100 MSFT shares at $400 cost basis.

Stock rallies to $415
You want to cap gains but also sell premium
Sell $420 call spread (sell $420 call, buy $425 call)
Profit if MSFT holds between $415-420
Assignment capped at $420 (vs. if you sold naked $420, it's uncapped upside)

Decision Framework: A Simple Algorithm

Before placing a spread, ask these three questions:

Question 1: "What's my directional bias?"

Bullish/Neutral? → Put spread (want stock to stay up)
Bearish/Neutral? → Call spread (want stock to stay down)
Truly neutral? → Iron condor or other multi-leg (spreads need directional confidence)

Question 2: "Where is IV Percentile?"

IV Percentile > 50%? → Premiums are rich. Call spreads will have best value (sell calls into rallies).
IV Percentile < 30%? → Premiums are thin. Be selective. Only trade the most liquid stocks.

Question 3: "Did anything just happen (earnings, news, dividend)?"

Yes, stock just spiked? → Call spread is ideal. Sell into peak IV, watch crush.
Yes, stock crashed? → Put spread is ideal. Stock stabilizes after panic, you profit.
No change, just consolidating? → Both spreads work. Choose based on slight directional bias.

Risk Profile: Why They're NOT Equivalent

Even though put and call spreads have the same max loss, they feel different psychologically and operationally.

Put Spread Psychology

You want the stock to stay up or rise slightly
If stock drops hard, you watch your position bleed
But losses are capped—you're protected by the long put
Theta works for you every day

Call Spread Psychology

You want the stock to consolidate or drop slightly
If stock rips up, you watch it approach your short strike
But losses are capped—protected by the long call
Theta works for you every day

Key insight: The psychology is different, but the math is identical. Both spreads have capped risk and limited profit.

Tax Implications: Put vs Call Spreads

Both spreads are treated as spreads for tax purposes (not separate long/short trades). But there's a nuance:

Put Spreads:

Short put assignment = forced purchase of 100 shares at short strike
This is treated as a stock purchase (opens a new stock position)
If you later sell those shares, the cost basis is your short strike

Call Spreads:

Short call assignment = forced sale of 100 shares at short strike
If you own the shares, this is a stock sale (closes the position)
If you don't own shares, this creates a "naked" short position (usually auto-bought by brokers)

For income purposes: Both are short-term gains/losses (the spread premium counts as income in the year it's realized).

Advanced: Mixing Put and Call Spreads → Iron Condor

What if you're uncertain about direction but confident about range?

Iron Condor Setup:

Sell $440 put spread (bullish protection)
Sell $460 call spread (bearish protection)
Profit if SPY stays between $440-460

Why? You capture premiums from both spreads while limiting risk to the width of the wider spread.

This is beyond the scope here, but the takeaway: put and call spreads are building blocks for more complex strategies.

Common Mistakes (Avoid These)

Mistake 1: "I'll sell put spreads because the profit % is higher"

Wrong. A 10-spread on a $1,000 margin is the same $150 max profit as a $350 spread on $350 margin. You're deploying different capital, not outperforming.

Mistake 2: "Call spreads are always better after rallies"

Almost. Yes, IV is higher on calls after rallies. But sometimes put spreads offer better risk/reward if the stock is vulnerable on the downside. Check both.

Mistake 3: "I can hold a spread to expiration"

Risky. Hold spreads to 21 DTE, then close or roll. Gamma risk on expiration day is extreme (assignment surprise, pin risk, etc.).

Mistake 4: "My broker can hold a spread to expiration—I don't need to worry"

Overconfident. Even if your broker auto-closes, you might get whipsawed by assignment sequencing. Close manually before 7 DTE.

Quick Reference: Your Spread Decision Template

Before placing a spread, fill in:

My directional bias: ___________ (bullish / bearish / neutral)
Current IV Percentile: __________ (check your broker)
Recent event (earnings, news, etc.): __________ (yes / no)
Spread type I'll use: __________ (put / call)
Short strike (delta 0.20-0.30): __________
Long strike (wider by 5): __________
Max profit: __________ (net credit)
Max loss: __________ (width - credit)
Breakeven: __________ (short strike ± net credit)
Close date: __________ (mark calendar at 21 DTE)

Final Thought

Put and call spreads are the same architecture: defined risk, capped profit, theta decay in your favor. The choice between them comes down to your directional bias and market conditions.

After earnings → Call spreads (sell into rallies). After crashes → Put spreads (sell support). Quiet consolidation → Choose based on mild bias. High IV → Call spreads (premiums richer). Low IV → Only trade liquid stocks, either spread type.

Master both. Use the right tool for the setup. And always close before gamma explodes on expiration day.

Put Credit Spreads: Risk-Defined Income Strategy - Deep dive on put spread setup and management
Call Credit Spreads: Bearish Income with Defined Risk - Call spread mechanics and bearish strategies
Iron Condor Strategy: Profit from Range-Bound Markets - Combine both spreads for neutral trades
Options Greeks Explained: Income Trader's Guide - Greeks management across spread types
Implied Volatility & Days to Expiry: Timing Your Options Entries - Timing spreads by IV and DTE

Call Credit Spreads vs Put Credit Spreads: Which to Trade