How is a 'Bull Call Spread' strategy constructed, and what is its maximum potential loss?

[ A ]Selling a lower-strike Call and buying a higher-strike Call; maximum loss is unlimited.

[ B ]Buying a lower-strike Call option and selling a higher-strike Call option with the same expiration; the maximum loss is strictly limited to the net premium paid upfront.[ CORRECT ]

[ C ]Buying a Put option and selling shares of physical stock; maximum loss is the stock price.

[ D ]Buying 100 Call options and shorting 100 Put options simultaneously.

Takeaway

A Bull Call Spread is built by buying a lower-strike call and selling a higher-strike call with the same expiry; its maximum loss is strictly capped at the net premium (debit) paid upfront.

Derivation

The investor pays a larger premium for the lower-strike call (more likely to finish in-the-money) and receives a smaller premium for the higher-strike call sold against it, so the net cost of entering the position is the difference between the two premiums — this net debit is also the absolute worst-case loss, since if the stock finishes below the lower strike, both options simply expire worthless and only the initial debit is lost. In exchange for this defined, limited-loss profile, the strategy also caps maximum profit at the difference between the two strikes minus the net debit paid, making it a moderately bullish, risk-defined alternative to buying a naked call outright.

Why the others fail

A — Selling a lower-strike Call and buying a higher-strike Call; maximum loss is unlimited.

Selling a lower-strike call and buying a higher-strike call (reversed legs) with unlimited loss potential describes a different, riskier structure than the Bull Call Spread's defined.

C — Buying a Put option and selling shares of physical stock; maximum loss is the stock price.

Buying a put while shorting physical stock combines a bearish options position with a short equity position, an entirely different, unrelated strategy from the two-leg call spread described here.

D — Buying 100 Call options and shorting 100 Put options simultaneously.

Buying 100 calls while shorting 100 puts describes a synthetic long stock position (unlimited risk on both sides), not the defined-risk two-leg vertical spread that characterizes a Bull Call Spread.