A vertical call spread (a bull call spread) is two calls at once: you buy a call at a lower strike and sell a call at a higher strike, same expiry. The sold call pays for part of the bought call, so it's cheaper than buying a call outright — but your gains are capped at the higher strike. Both your maximum profit and your maximum loss are defined the moment you open it: you can't lose more than the (reduced) premium you paid, and you can't make more than the gap between the strikes minus that premium.
Why traders use it
It's a mildly bullish, budget position. You think a stock drifts up but not to the moon, so you sell away the far upside you don't expect anyway to cut your cost and your break-even. The trade-off is symmetric: defined risk in exchange for a defined ceiling.
The backtesting problem
We don't publish a track record for a DIY spread. Any backtest of picking strikes and expiries needs real historical option chains and realistic (not mid-price) fills — without them the P&L is fiction, which we won't do (see the methodology). The listed cousin is a defined-outcome / "buffer" ETF: a whole fund built from option spreads — a put spread that buffers the downside, a short call that caps the upside — over a defined period, with a real total-return NAV. That's our Defined-Outcome Buffer strategy, whose track record is the funds' actual audited backtest, not a simulated spread.
The catch
A defined payoff cuts both ways: you give up your best up-months for the buffer, so expect materially less upside than a plain index, and the buffer and cap reset on each fund's own annual outcome period. No edge over holding the index is claimed.
Educational material — not investment advice.