Bull Put Spread

What is a bull put spread?

A bull put spread is a two-leg options strategy that sells a higher-strike put and buys a lower-strike put in the same expiration for a net credit. It keeps the full credit when the stock finishes at or above the short strike, and the long put caps the loss if the stock falls. Traders also call it a put credit spread or a short put vertical.

The short put collects premium, and the long put establishes the lower boundary of the complete expiration payoff. The position also profits between the short strike and its lower breakeven, so it suits a bullish to neutral view. Both puts use matching underlying, deliverable, expiration, and quantity.

How to calculate bull put spread profit, loss, and breakeven

The example sells the 50 put for $1.60 and buys the 45 put for $0.45. The net credit is $115 for one standard spread. Its maximum expiration loss is $500 of strike width minus the $115 credit, or $385. Breakeven is $50 minus $1.15, or $48.85.

At $50 and every higher expiration price, both puts have zero intrinsic value and profit is $115. At $47, the short put has $300 of intrinsic value, producing a $185 loss after the credit. At $45 and every lower expiration price, the maximum loss is $385.

Bull put spread P&L before expiration

Track the full spread’s P&L before expiration as the entry credit minus its closing debit. A $40 closing debit on this example realizes a $75 profit.

Net Greeks equal the long put’s Greek minus the short put’s Greek. Theta and vega depend on the stock's location relative to both strikes. Recalculate them across prices and dates.

How to choose bull put spread strikes

Use price structure, put walls, and options flow to select the support area you want to trade. Compare candidate strike pairs by their credit, breakeven, complete loss limit, and buying-power requirement.

The short strike marks the start of maximum expiration profit. Breakeven marks the start of any expiration profit. Calculate probability over that profitable region, and use put delta separately to measure price sensitivity.

When comparing spread widths, hold the short strike and expiration fixed so the effect of moving the long put is clear. Then compare complete packages across different short strikes. The options profit calculator compares the collected premium, profitable price region, and full dollar exposure before the order is placed.

Bull put spread margin and position size

The example’s $500 strike-width value less the $115 opening credit leaves a $385 maximum expiration loss. The broker's order preview supplies the account’s buying-power requirement. Use both the complete dollar loss limit and that requirement when sizing the position.

Managing a bull put spread and assignment

Open and close the two legs as a spread order with a net price limit. Selling the long put alone removes its protection from the short put. Assignment of the standard short put buys 100 shares at its strike, so plan whether to retain stock or close the package before expiration.

Risks and limitations of bull put spreads

• Size the spread from its maximum loss. The example risks $385 to collect $115, and at expiration the loss reaches its maximum at or below the $45 long strike.
• Track implied volatility while the spread is open. With the stock above the short strike, the spread has negative vega, so a rise in implied volatility raises the cost to buy it back even when the stock has not moved.
• Plan for early assignment on the short put. The American-style short put can be assigned before expiration, which buys 100 shares at the short strike while the long put stays open.
• An expiration price between the strikes leaves the short put in the money and the long put worthless. Expiration exercise is automatic for an in-the-money put unless its holder declines, so close both legs before the bell or wake up long 100 shares per spread.
• Enter and exit with one net limit order. Each leg pays a bid-ask spread on entry and again on exit, and those costs come out of a $115 maximum profit.

Bottom line

Every bull put spread bets that a floor holds, and at $115 of credit against a $385 maximum loss, one break at $45 erases the credit from several wins. Sell it on a stock you expect to stay above the $50 short strike, and size it from the $385 and the broker’s buying-power requirement.