Bull Put Spread
Description
Selling a higher-strike put and buying a lower-strike put in the same expiry, collecting a net credit that is kept in full if the underlying stays above the higher strike.
Setup
- Sell one put at a higher strike.
- Buy one put at a lower strike, same expiry, to cap the risk.
Context
A common income trade for a trader who is neutral to bullish and wants defined risk instead of a naked short put.
Risk Profile
Maximum gain is the net credit collected. Maximum loss is the difference between strikes minus that credit, realized if the underlying finishes at or below the lower strike.
Pros
- Collects premium up front.
- Defined, capped risk unlike a naked short put.
- Profits even if the underlying stays flat or rises.
Cons
- Maximum gain is limited to the credit received.
- Still loses money on a sharp decline through both strikes.
Effect of Time
Time decay favors the position, since the short put decays faster than the further out-of-the-money long put.
Effect of Volatility
The spread's net vega is small; both legs move together, muting the effect of a change in implied volatility.
Look-Alike Strategies
Live Structure
| Position | Right | Ratio | Strike | Expiry | Premium | Fill Price | Est. Fee |
|---|---|---|---|---|---|---|---|
| Short | Put | 1 | $85000.0000 | 24 Sep 2026 | $633.2177 | $506.5741 | $25.3287 |
| Long | Put | 1 | $84000.0000 | 24 Sep 2026 | $105.5363 | $118.2006 | $13.1920 |
Estimated Cost to Assemble
An estimate of what entering this structure right now would really cost: filling every leg by crossing the spread (the ask when buying, the bid when selling) instead of at the mid-price, plus an estimated exchange fee. Real fees and fills can differ from this estimate.
Payoff & Greeks vs. Underlying Price
The Greeks curves are a Black-Scholes model using each leg's current implied volatility, holding time to expiry fixed -- not live exchange data at every price, which only exists at the current price (dashed line).
Payoff at Expiration
This structure's value and profit/loss at expiration, at a handful of specific prices: every leg's strike, every breakeven, the current spot, and the chart's own range.
| Underlying Price | Value at Expiration | Profit / Loss | Return on Cost |
|---|---|---|---|
| $83000.0000 | -$1000.0000 | -$472.3186 | -89.5% |
| $84000.0000 | -$1000.0000 | -$472.3186 | -89.5% |
| $84429.0200 current | -$570.9800 | -$43.2986 | -8.2% |
| $84472.3186 breakeven | -$527.6814 | $0.0000 | +0.0% |
| $85000.0000 | $0.0000 | $527.6814 | +100.0% |
| $86000.0000 | $0.0000 | $527.6814 | +100.0% |