Bear Put Spread
Buying a higher-strike put and selling a lower-strike put with the same expiration to define bearish risk and cap reward.
What is a Bear Put Spread?
Buying a higher-strike put and selling a lower-strike put with the same expiration to define bearish risk and cap reward.
Construction
Buy a higher-strike put and sell a lower-strike put with the same expiration and contract count.
When it may be studied
To study a moderately bearish view with a smaller debit than a standalone long put, while accepting a capped payoff.
Expiration profile
Maximum risk: Net debit paid
Maximum reward: Strike width minus net debit
Break-even: Long put strike minus net debit
Worked example
Buy a 100 put and sell a 95 put for a $2 debit. Maximum simplified profit is $3 per share, maximum loss is $2, and break-even is $98.
Key risks and limitations
The full debit can be lost. Expiration between strikes and early assignment of the short put require a clear management plan.
Entry and exit checklist
- Confirm contract multiplier, expiration, exercise style, settlement, and liquidity.
- Calculate the maximum loss under the intended structure.
- Review earnings, dividends, corporate actions, and other event risks.
- Define an exit, adjustment, or expiration plan before entry.
- Understand what happens if one leg is assigned or exercised early.