Options Strategies
Bear Put Spread
Strategies Bear Put Spread
Component Sell lower strike price/level put, buy higher strike price/level put of the same month
Potential Profit
  • When the stock price/index level is below the break-even point
  • Limited to the difference between the two strike prices/levels minus the net premium paid
Maximum Loss Net premium paid
Time Value Impact Neutral
Break-even Higher strike price/level minus net premium paid
Remarks As different from a Bear Call Spread which would result in net premium received, a Bear Put Spread results in net premium paid, as the premium for the lower strike price/level put is lower than that of the higher strike price/level put.
  Net Position -1 Mar 180 Put +1 Mar 210 Put

Component Sell ABC Mar $180 Put, receive $10 and buy ABC Mar $210 Put, pay $30
Net Premium Pay $30-$10=$20
Break-even $210-$20=$190
Profit when Stock price is below $190
Potential Profit ($210-$180)-$20=$10
Potential Loss $20
Time Value Impact Neutral