Bear Put Spread options strategy
A bear put spread buys a put and sells a lower-strike put. It reduces premium cost in exchange for capped downside profit.
- Market outlook
- Moderately bearish
- Construction
- Buy a higher-strike put and sell a lower-strike put.
- Maximum risk
- Net debit paid.
- Maximum reward
- Strike width minus net debit.
- Breakeven at expiry
- Higher strike minus net debit.
Strategy questions
- What is a Bear Put Spread?
- A bear put spread buys a put and sells a lower-strike put. It reduces premium cost in exchange for capped downside profit.
- What is the maximum risk of a Bear Put Spread?
- Net debit paid.
Risk note
Options are leveraged and expire. Model payoff at multiple prices and volatility levels in the Options Strategy Lab before considering a position.