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Bear Put Spread

Bearish Strategy

Use Zuviz's free options visualizer to build this strategy instantly. A debit spread for bearish outlook. Buy a higher-strike put and sell a lower-strike put to reduce cost.

⚡ Key Takeaways

  • Market Outlook: Moderately bearish
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  • Max Profit: Difference between strikes - net debit
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  • Max Loss: Net debit paid to establish spread
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  • Breakeven: Higher strike - net debit
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  • Best for: Bearish plays with limited capital, defined risk
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  • Greeks Impact: Negative Theta (but less than long put), negative Delta

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Market Outlook
Moderately Bearish
Max Profit
Width - Debit
Max Loss
Net Debit
Breakeven
Higher Strike - Debit

📊 Payoff Diagram

Open in Zuviz →

🏗️ Strategy Structure

Leg Action Type Strike Premium
1 Buy Put $105 (Higher) $5.00
2 Sell Put $100 (Lower) $2.00

Net Debit: $5.00 - $2.00 = $3.00/share ($300/contract)

Max Profit: ($105 - $100) - $3.00 = $2.00/share ($200/contract)

🧮 Key Calculations

🎯 When to Use This Strategy

  • Moderately bearish: Expecting a decline with a target price
  • Reduce cost: Cheaper than a naked long put
  • Defined risk: Know your max loss upfront
  • High IV environment: Selling the lower put offsets expensive premiums

📈 Greeks Impact

Delta (Δ)

Negative - You want the stock to fall.

Theta (Θ)

Positive for short strategies (time helps), negative for long strategies.

⚖️ Pros & Cons

Pros

  • Defined risk
  • Profits from drop
  • Cheaper than long put

Cons

  • Capped profit
  • Time decay hurts (usually)
  • Multiple commissions

📝 Real-World Example

Stock: SPY at $450. Trade: Buy $440 Put, Sell $430 Put.

Debit: $4.00. Max Profit: $600. Max Loss: $400. Breakeven: $436.

🔗 Related Strategies

📉 Long Put

Unlimited profit potential but higher cost

💰 Bear Call Spread

Similar bearish outlook, credit spread

Visualize This Strategy

See the payoff diagram in Zuviz.

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