Seagull Spread Calculator

Seagull Spread at a glance

How a seagull spread works

The seagull spread, also called a bullish seagull or seagull option strategy, gets its name from the payoff chart: a flat body in the middle, one wing sloping down on the left and a capped wing on the right. It starts with a bull call spread, then sells a put below the market to finance it. Seagulls are common in currency and commodity hedging, and the same structure works on listed stock options. Depending on strikes and skew, it can open for a small debit, near zero, or a small credit.

At expiration, below the put strike the short put loses one for one, and any net debit adds to the loss. Between the put strike and the long call strike, every option expires worthless, so the result is just the net credit or debit. Between the two call strikes, profit rises one for one. Above the upper call strike, the short call caps the gain and the payoff is flat at its maximum. Compared with a plain bull call spread, you trade a lower cost for open downside risk below the put.

Before expiration the seagull has a positive delta and modest net gamma, theta, and vega at entry, because the short put and short call partly offset the long call. As the stock rallies toward the upper strike, theta turns positive and the trade behaves like a call spread close to its maximum value. If the stock drops toward the put strike, the short put takes over: delta stays positive, losses accelerate, and the rising implied volatility that usually comes with a selloff adds to the damage.

Seagull Spread example with real numbers

With the stock at $100, implied volatility at 30%, a 4.1% risk free rate and no dividend, you would sell 1 95 put (32 days) at $1.43, buy 1 100 call (32 days) at $3.73, sell 1 105 call (32 days) at $1.78. That is a net debit of $52. At expiration a maximum profit of $448 and a maximum loss of $9,552, with a breakeven at $100.52. The lognormal chance of profit is 48%.

These are theoretical American option prices from the Bjerksund and Stensland model, not live quotes. Load any ticker in the seagull spread calculator above to run the same math on real market prices.

When to use a seagull spread

• You expect a moderate rise to the upper call strike and want to pay little or nothing for that exposure.
• You would be comfortable buying the stock at the put strike.
• Put skew makes the out of the money put rich relative to the calls.
• You want a cheaper alternative to a bull call spread and accept downside risk to get it.

Max profit, max loss and breakeven

Maximum profit

Upper call strike minus lower call strike plus net credit (or minus net debit), times 100. You earn it when the stock closes at or above the upper call strike at expiration.

Maximum loss

Put strike minus net credit (or plus net debit), times 100, if the stock falls to zero. Below the put strike the position loses like owning 100 shares bought at the put strike.

Breakeven

With a net debit, breakeven = lower call strike plus net debit. With a net credit, breakeven = put strike minus net credit. If opened at zero cost, the trade breaks even anywhere between the put strike and the lower call strike.

Seagull Spread Greeks

• Delta: Delta is positive at entry, reflecting the long call and the short put, and it fades toward zero as the stock climbs above the upper call strike.
• Gamma: Gamma is positive near the long call strike and negative near both short strikes, especially close to expiration.
• Theta: Theta is usually small at entry and turns positive when the stock nears either short strike.
• Vega: Vega is usually modestly negative because you are short two options against one long, so falling implied volatility tends to help.

See the live numbers for your position in the Greeks tab of the calculator, or explore a single option in the options Greeks calculator.

Early exercise and assignment risk

A seagull has two short American style legs, and they respond to different triggers. The short call at the upper strike is vulnerable before ex dividend dates once it is in the money and its time value has fallen below the dividend. If it is assigned, you are short 100 shares, but your long at the money call covers them: exercise it, or buy shares and sell the call, and you realize the full call spread value early. The main cost is the dividend you owe for being short on the ex dividend date.

The short put is the other exposure. After a sharp drop, a deep in the money put with little time value may be exercised early, leaving you long 100 shares at the put strike plus a bull call spread that is now far out of the money. You need cash or margin to hold those shares. Puts are rarely exercised just before an ex dividend date, because the dividend helps put holders, but higher interest rates make early put exercise more common. At expiration, pin risk can strike at either short strike, so close those legs before the final session.

The calculator's Early exercise risk tab flags short legs that are likely to be assigned. For a single option, use the early exercise calculator or read how early exercise and assignment work.

Pros and cons

How to manage a seagull spread

• Choose the put strike at a level where owning the shares would be acceptable.
• Close or roll the short put if the stock breaks below a key support level.
• Take profits when the call spread is near full value rather than holding into expiration.
• Buy a lower strike put if downside risk grows, which converts the trade into a defined risk structure.

Seagull Spread FAQ

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Educational tool, not financial advice. Calculations are theoretical and depend on your inputs; real fills, fees, early assignment and dividends can change results. Options involve risk and are not suitable for every investor.