Put Spreads: Bearish and Bullish Trades With Defined Risk

Put spreads use one long put and one short put. A bear put spread is a debit trade that profits from a decline. A bull put spread is a credit trade that profits if the stock stays above a level.

Both structures define risk better than naked options, which makes them useful for disciplined execution.

Bear put spread payoff

A lower-cost bearish trade with capped profit below the short put.

Horizontal axis: underlying stock price at expiration. Vertical axis: strategy profit or loss per share equivalent.

High in range: +10.00Low in range: -5.00

Example shown: buy 105 put, sell 90 put, net debit 5.

Match the short strike to the downside target.

Bear put spread

Buy a higher-strike put and sell a lower-strike put. This lowers the cost of a bearish put trade but caps profit below the short strike. Use it when you have a downside target.

Bull put spread

Sell a higher-strike put and buy a lower-strike put. You collect a credit and want the stock to stay above the short strike. Use it when you are neutral to bullish and can define the support level.

Execution

Enter as a spread order, know max loss, and avoid holding credit spreads to expiration just to squeeze out tiny remaining premium.

Execution playbook

Use this section to turn the setup into a broker-screen plan: selection, follow-up action, risk limits, and reasons to skip the trade.

Key execution ideas

Basic put spreads include bearish, bullish, and calendar versions.
The same put building blocks can express downside or support.
Defined risk is the main advantage over naked put positions.

Before entering the order

For a bear put spread, buy the higher put and sell the lower put near target.
For a bull put spread, sell the higher put and buy the lower put as protection.
Check max loss, max gain, and break-even before comparing probabilities.

Follow-up action

Take debit-spread profits when the downside target is reached.
Close credit spreads after most of the credit is captured.
Avoid expiration pin risk around the short strike.

Skip the trade when

The spread width is too large for the credit or debit.
The short strike creates assignment risk you do not want.
The underlying lacks enough option volume across both strikes.

Options can lose money quickly. Treat every setup as a defined plan: entry, maximum loss, adjustment trigger, exit target, and a reason to skip the trade when pricing is not favorable.