Bull put spread
Sell a put and buy a lower-strike put for defined-risk bullish exposure.
The bull put spread is a defined-risk, bullish-to-neutral options strategy that involves selling a put at one strike and buying a put at a lower strike, both with the same expiration. You collect a net credit upfront and profit if the stock stays above your short put strike.
Bias: Bullish to neutral
Risk profile: Defined
Ideal conditions: High IV rank, stock expected to hold above a support level
How it's constructed
- Sell an OTM put at a higher strike (closer to the stock price)
- Buy an OTM put at a lower strike (further from the stock price)
- Same expiration for both legs
- Net result: credit received
The bought put caps your maximum loss, turning what would be a naked put (undefined risk) into a defined-risk spread.
Setup example
SPY is trading at $510. You set up a bull put spread:
- Sell the $500 put, collect $2.50
- Buy the $495 put, pay $1.30
- Net credit: $1.20 per share ($120 per spread)
Max profit, max loss, breakeven
| Metric | Calculation | Value |
|---|---|---|
| Max profit | Net credit collected | $120 per spread |
| Max loss | Spread width − net credit | $380 per spread |
| Breakeven | Short put strike − net credit | $498.80 |
| Profit zone | SPY stays above $498.80 at expiry | , |
When to use a bull put spread
Best conditions:
- You're bullish or neutral on a stock, you expect it to hold above your short strike
- IV rank is above 40, elevated premium inflates your credit
- You want defined, capped risk (unlike a naked put)
- The stock has clear technical support above your short strike
Avoid when:
- The stock is in a downtrend with no clear support
- IV rank is very low, the credit collected won't justify the risk
- Earnings or a major catalyst is imminent within the spread's expiration window
Choosing your strikes
Short put strike: Most traders target the 0.20 to 0.30 delta strike for the short put. This gives approximately a 70 to 80% probability of the spread expiring worthless.
Spread width: Wider spreads (e.g. $10 wide) collect more credit but increase max loss. Narrower spreads (e.g. $5 wide) limit max loss but reduce the credit-to-width ratio. A $5 wide spread at $1.20 credit is 24% of width, a reasonable target.
Managing the trade
Close at 50% profit: If you collected $1.20, consider closing the spread when you can buy it back for $0.60. This banks your profit and eliminates the risk of a late reversal.
Stop loss: Many traders set a stop at 2× the credit received. If you collected $1.20, close if the spread value reaches $2.40, limiting your loss to about 30% of the max loss.
Rolling: If the short put is tested, you can roll the spread down and out, buy back the current spread and sell a new one at lower strikes with a later expiry, often for a net credit.
Bull put spread vs cash-secured put
A bull put spread is a defined-risk alternative to a naked cash-secured put. The tradeoffs:
| Bull put spread | Cash-secured put | |
|---|---|---|
| Risk | Defined (spread width) | Large (stock to zero) |
| Premium collected | Less | More |
| Capital required | Less | More |
| Best for | Smaller accounts, higher IV | Larger accounts, stock you want |
Related terms: Credit spread, put option, defined risk, IV rank, delta, cash-secured put, iron condor
Try it on Stryke: Find high IV rank candidates for bull put spreads in the Options Screener.
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