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Bear Put Spread

intermediate6 min read

The mirror image — a defined-risk way to profit from a moderate fall.

A bear put spreadA defined-risk bearish options strategy. is simply the bull call spreadA defined-risk bullish options strategy. flipped for a bearish view: you buy a putThe right, not the obligation, to buy or sell at a set price. AND sell a lower-strikeThe fixed price at which an option can be exercised. putThe right, not the obligation, to buy or sell at a set price. (same expiry). It’s a defined-risk way to profit from a moderate fall, cheaper than buying a putThe right to sell the underlying at a set price — a bearish bet. outright.

The logic is identical to the bull call spreadA defined-risk bullish options strategy., just mirrored — which is the real lesson: *once you understand one spreadThe gap between the highest buy price and lowest sell price., you understand them all, by symmetry.* You buy the putThe right, not the obligation, to buy or sell at a set price. you want (downside protection/profit) and sell a lower-strikeThe fixed price at which an option can be exercised. putThe right, not the obligation, to buy or sell at a set price. to defray the cost and theta drag, accepting that your profit is capped at that lower strikeThe fixed price at which an option can be exercised.. You’re betting on a moderate decline, trading away the unlikely crash-to-zero upside to make the likely modest drop cheaper and higher-probability. Bullish moderate → bull call spreadA defined-risk bullish options strategy.; bearish moderate → bear put spreadA defined-risk bearish options strategy.. Same machine, opposite direction.
ExampleStock at ₹1,000. Buy the ₹1,000 putThe right, not the obligation, to buy or sell at a set price. for ₹40, sell the ₹950 putThe right, not the obligation, to buy or sell at a set price. for ₹20 → net cost ₹20. Max loss ₹20; max gain = (₹50 − ₹20) = ₹30 if the stock is ≤ ₹950 at expiry. A cheaper, defined-risk bearish bet that profits on a moderate drop.
Key takeawayA bear put spreadA defined-risk bearish options strategy. = buy a putThe right, not the obligation, to buy or sell at a set price. + sell a lower-strikeThe fixed price at which an option can be exercised. putThe right, not the obligation, to buy or sell at a set price.: the mirror of the bull call spreadA defined-risk bullish options strategy. for a moderate bearish view. Lower cost and theta than a naked putThe right to sell the underlying at a set price — a bearish bet., with capped profit. Master one spreadThe gap between the highest buy price and lowest sell price. and you’ve mastered them all by symmetry.
FAQs
Why sell the lower-strike put instead of just buying the put?

To cut your cost, breakeven and time-decay drag — the same reason as the bull call spread. You’re trading away profit below the lower strike (an extreme crash you may not expect) to make the moderate-decline bet cheaper and higher-probability. If you expect a crash to near zero, a naked put’s larger payoff may suit better.