Bear Put Spread options strategy
A bear put spread buys a higher-strike put and sells a lower-strike put, giving defined-risk bearish exposure at a reduced cost versus a long put.
How the bear put spread is built
Buy the 210 put for 8 and sell the 200 put for 4, for a net debit of 4.
Profit and loss at expiration
The expiration payoff is calculated as: Profit = max(210 − S, 0) − max(200 − S, 0) − net debit.
- Maximum profit
- Difference between strikes − net debit = (210 − 200) − 4 = $6 per share.
- Maximum loss
- The net debit paid = $4 per share.
- Breakeven
- Higher strike − net debit = 206.
Worked example
At an expiration price of 195, payoff = 15 − 5 − 4 = $6 per share, the maximum for this spread.
When to use it
Use it when you are moderately bearish and want defined risk with lower cost and less time decay than a standalone long put.
Managing the risk
Risk is capped at the net debit. Maximum profit is reached at or below the lower strike.
Frequently asked questions
How is a bear put spread different from a long put?
The short lower-strike put reduces cost but caps the maximum profit, unlike an open-ended long put.
Where is the maximum profit reached?
At or below the lower strike, where both puts are in the money.
Model this strategy
Open the free OptCurve calculator to plot the bear put spread payoff, mark breakevens, and overlay it with other strategies.
Open the P&L calculator