Bear Put Spread
A debit spread that profits from a moderate decline in the stock price. You buy a higher-strike put and sell a lower-strike put to reduce cost. Risk and reward are both capped.
Payoff Diagram
How to Set Up This Trade
Buy a put at a higher strike price and simultaneously sell a put at a lower strike price, both with the same expiration.
Trade Setup — 2 Legs
When to Use This Strategy
You are moderately bearish and expect the stock to drop to or below the short put strike by expiration.
Tips from the Pros
- 1
Similar in concept to the bull call spread, but for a bearish outlook.
- 2
Target the short put strike at your expected support level for the stock.
- 3
Close early at 50-75% of max profit to lock in gains and free up capital.
Quick Reference
Max Profit
Difference between strike prices minus the net premium paid (per share).
Max Loss
Limited to the net premium paid (debit).
Breakeven
Higher strike price - net premium paid.
Best IV Environment
Any IV
Time Decay (Theta)
Mixed effect
Risk Level
Low RiskLearn More
Our courses cover this strategy with real trade examples and live market analysis.
Browse CoursesRelated Bearish Strategies
Other strategies for a bearish market outlook.
Long Put
Buy a put option to profit from a decline in the underlying stock. This is the simplest bearish strategy with large profit potential and limited downside risk.
Bear Call Spread
A credit spread that profits when the stock stays below the short call strike. You sell a lower-strike call and buy a higher-strike call for protection, collecting a net credit.