Bull Put Spread Strategy
Sell a higher strike put, buy a lower strike put. Collect premium on bullish bets.
What is a Bull Put Spread?
A Bull Put Spread (credit spread) involves selling a higher-strike put and buying a lower-strike put for protection. You collect premium upfront. Profit if stock stays above short strike. Popular income strategy with defined risk and high win rate.
When to Use a Bull Put Spread
Use when bullish or neutral and want to collect premium. Best in high IV environments. Popular for 30-45 DTE trades at 1 standard deviation OTM for ~70% POP trades.
Key Formulas
- Max Profit
- Net credit × lot size
- Max Loss
- (Width of spread - Net credit) × lot size
- Breakeven
- Short put strike - Net credit
Example Trades
Sell AAPL $180 Put for $3, Buy $175 Put for $1.50. Net credit $1.50. Max profit $150. Max loss $350.
Sell NIFTY 22000 Put for ₹200, Buy 21900 Put for ₹150. Net credit ₹50 → ₹3,250 (× 65). Max profit ₹3,250. Max loss ₹3,250.
Common Mistakes to Avoid
- Taking too small a credit (< 1/3 of width)
- Holding through earnings (gamma risk)
- Not rolling when tested
- Selling too close to current price
Related Strategies
Bull Put Spread FAQ
What is a Bull Put Spread?
A Bull Put Spread (credit spread) involves selling a higher-strike put and buying a lower-strike put for protection. You collect premium upfront. Profit if stock stays above short strike. Popular income strategy with defined risk and high win rate.
When should I use a Bull Put Spread?
Use when bullish or neutral and want to collect premium. Best in high IV environments. Popular for 30-45 DTE trades at 1 standard deviation OTM for ~70% POP trades.
What is the maximum profit and loss for a Bull Put Spread?
Max profit: Net credit × lot size. Max loss: (Width of spread - Net credit) × lot size.
What is the breakeven price for a Bull Put Spread?
Breakeven: Short put strike - Net credit. US example: Sell AAPL $180 Put for $3, Buy $175 Put for $1.50. Net credit $1.50. Max profit $150. Max loss $350. Indian-index example: Sell NIFTY 22000 Put for ₹200, Buy 21900 Put for ₹150. Net credit ₹50 → ₹3,250 (× 65). Max profit ₹3,250. Max loss ₹3,250.
What are common mistakes when trading a Bull Put Spread?
Common mistakes include: Taking too small a credit (< 1/3 of width); Holding through earnings (gamma risk); Not rolling when tested; Selling too close to current price.
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