Bull Put Spread Strategy

How Bull put works

It defines the maximum loss that a naked short put leaves open, at the cost of capping profit at the credit and using margin for the width.

Exact option legs

Sell higher-strike put + buy lower-strike put

• SELL 1 × $95.00 put expiring 2026-01-16 at $2.60
• BUY 1 × $90.00 put expiring 2026-01-16 at $1.00

Payoff, breakeven and risk

At expiration the position is worth the intrinsic value of each leg. The maximum profit is $160.00, the maximum loss is -$340.00, and the position breaks even at $93.40.

Worked example

With the underlying at $100.00:

• The spread collects a net credit of 1.60 for a $5-wide structure.
• Maximum profit is $160 and maximum loss is $340 at or below 90.
• Breakeven is 93.40, the short strike minus the credit.

Strike selection

Sell the short put below a level you expect to hold and buy the long put one or more strikes lower. Narrower wings raise the return on risk but lower the breakeven buffer.

Expiration selection

Credit spreads decay fastest in the final weeks. Shorter expirations raise annualized return but leave less room to manage a test of the short strike.

Common mistakes

• Selling a short strike too close to the money for a small credit.
• Ignoring assignment and pin risk near expiration.
• Measuring return without comparing the credit to the width at risk.

FAQ

What is the maximum loss?

The width between the strikes minus the credit received, per spread.

Is a bull put spread bullish?

It profits when the stock stays above the short strike, so it is moderately bullish to neutral.

Can I be assigned on the short put?

Yes, especially near expiration; the long put caps the loss but not the assignment mechanics.

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