bearishPays debit

Bear Put Spread

A bear put spread buys a put and sells a lower-strike put against it, cutting the cost of the bearish bet in exchange for capping the payoff. It's the cost-conscious version of a long put.

When it makes sense

You expect a move down to (but not necessarily beyond) a specific level
Implied volatility is high enough that outright puts feel expensive
You want a better breakeven than a naked long put

How it works

Buy a put, sell a lower-strike put in the same expiration. Your net debit is the max loss. Max profit is the strike width minus the debit, reached when the stock closes at or below the short strike.

Risk & reward

Defined on both sides. The short put finances the long one — you give up the last stretch of downside profit for a lower cost and closer breakeven. Time decay hurts less than a naked put, especially when the spread is centered near the money.

Worked example

Stock at $60. Buy the 45-day $60 put, sell the $55 put, for a $1.90 debit ($190). Stock at or below $55 at expiration: spread is worth $500 — a $310 profit (163% return). Above $60: lose the $190.

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