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A bearish debit spread: buy a higher-strike put and sell a lower-strike put. Profits when the stock drops below the higher strike. Risk limited to net debit paid.
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Key takeawayThe defined-risk bearish trade. Cheaper than buying a put outright, but your profit is capped at the spread width minus the debit.
💡 Why It Matters
The bear put spread is the defined-risk bearish debit trade — the mirror image of a bull call spread. You profit from a decline with capped risk equal to the debit paid.
⚙ How It Works
Buy a higher-strike put, sell a lower-strike put at the same expiration. Debit paid = max loss. Max profit = spread width − debit. The long put provides downside exposure; the short put reduces cost but caps your profit.
📋 Example
SPY at $580. Buy $580 put ($8.00), sell $570 put ($4.50). Debit: $3.50. Max profit: $6.50 (at $570−). Breakeven: $576.50. You need SPY to drop $3.50 to breakeven — roughly 0.6%.
⚠ Common Mistakes
Buying bear put spreads to hedge a portfolio of long stocks. Spreads cap your protection at the lower strike — if the market drops 15%, you're only protected for the spread width. For true portfolio hedging, consider outright puts or collars.
⚡ Bear Put Spread in VolRadar
❓ FAQ
What is Bear Put Spread?
A bearish debit spread: buy a higher-strike put and sell a lower-strike put. Profits when the stock drops below the higher strike. Risk limited to net debit paid.
Why does Bear Put Spread matter for premium sellers?
The defined-risk bearish trade. Cheaper than buying a put outright, but your profit is capped at the spread width minus the debit.
How does Bear Put Spread work?
Buy a higher-strike put, sell a lower-strike put at the same expiration. Debit paid = max loss. Max profit = spread width − debit. The long put provides downside exposure; the short put reduces cost but caps your profit.
What are common mistakes with Bear Put Spread?
Buying bear put spreads to hedge a portfolio of long stocks. Spreads cap your protection at the lower strike — if the market drops 15%, you're only protected for the spread width. For true portfolio hedging, consider outright puts or collars.
Related Terms
Albatross Spread
A very wide iron condor where the short strikes are far OTM and the wings are far apart.
Bear Call Ladder
Sell one lower-strike call, buy one middle-strike call, buy one higher-strike call.
Bear Call Spread
A bearish credit spread that sells a lower call and buys a higher call, collecting premium if the stock stays below the short strike.
Bear Put Ladder
Sell one higher-strike put, buy one middle-strike put, buy one lower-strike put.
This is not financial advice. Read our full investment disclaimer.