Bull Put Spread
A Bull Put Spread is a credit spread built by selling a higher-strike put and buying a lower-strike put of the same expiry. It profits when price stays above the short strike.
At a glance
Strategy Snapshot
Market View
Mildly bullish to neutral — expecting price to hold above the short strike.
Net Cost
Net credit (higher-strike put premium − lower-strike put premium).
Legs
Sell higher-strike Put + Buy lower-strike Put
Max Profit
Net credit received.
Max Loss
Difference between strikes − Net credit received.
Breakeven
Higher strike − Net credit received.
Build
Strategy Construction
Color-coded legs — emerald for long positions, rose for short positions. Strikes shown around reference spot 100.
- SELLLeg 1
1 × 100 PE
Premium 3.00
- BUYLeg 2
1 × 90 PE
Premium 1.00
Visualize
Payoff at Expiry
Conceptual payoff with reference spot = 100. Strikes and premiums shown are illustrative.
Sensitivity
Greeks Exposure
Net portfolio Greek exposure for a typical setup. Bars show directional sensitivity from −1 (short) to +1 (long).
Delta
Directional exposure to underlying price.
+0.35
Long
Gamma
Sensitivity of Delta to price changes.
-0.10
Neutral
Theta
Time decay exposure (per day).
+0.30
Long
Vega
Sensitivity to implied volatility shifts.
-0.25
Short
Strengths
Advantages
Why traders use it
- Theta-positive — benefits from time decay.
- Defined risk and defined reward.
- Profits even if price stays flat above the short strike.
Trade-offs
Risks & Disadvantages
What can go wrong
- Reward is capped at the net credit.
- Sharp downside moves hit the full wing risk.
- Margin-intensive vs the small credit collected.
Avoid
Common Mistakes
Watch out for
- Selling strikes too close to spot, raising assignment risk.
- Ignoring wing width vs credit ratio — poor risk/reward.
- Holding through expiry without an adjustment plan.
AI Insight
LiveBull Put Spreads perform efficiently during low directional volatility with elevated put-side IV skew. Aim for ~30–40 delta short legs and exit at 50–70% of max profit.
Generated by NextQuantLabs AI — for educational guidance only.
Questions
Frequently Asked
When is max profit reached?+
When the underlying closes at or above the higher (short) strike at expiry — both puts expire worthless and you keep the credit.
Debit vs Credit — which spread to pick?+
Use credit spreads (Bull Put) when IV is elevated and theta works in your favor. Use debit spreads (Bull Call) when IV is low or you want directional convexity.