Watch the reel
A bear put spread buys one put and sells a lower put to bet on a decline for less. This reel shows how it caps both your cost and your reward into a defined-risk downside trade.
Bear Put Spread
Buy a put and sell a lower-strike put in the same expiration. Net debit, defined-risk, bearish. The short put subsidizes the long.
Payoff at expiration
Example legsGreeks
When to use it
You're moderately bearish with a specific downside target. Especially useful when put IV is elevated (the short put helps fund the long).
Setup
Pick the long put at where you want to start being short (often ATM). Pick the short put at your downside target. Wider spreads have more potential reward but cost more.
Steps
- 1Pick an expiration that covers your thesis (30–60 DTE typical).
- 2Buy the higher-strike put.
- 3Sell the lower-strike put at your target.
- 4Submit as a single combo order at a limit near the mid.
Cost
Net debit = long put premium − short put premium. Maximum loss = debit.
Effect of price
Profit grows as the underlying falls toward the short strike, then caps. Above the long strike at expiration, you lose the full debit.
Effect of time
Roughly theta-neutral at initiation; as the stock approaches the short strike, theta turns in your favor.
Effect of volatility
Roughly vega-neutral, which makes this resilient to IV moves either way.
Pros
- Lower cost than an outright long put.
- Defined risk and reward.
- Less vega risk — robust to vol crush.
Cons
- Capped reward below the short strike.
- Needs a meaningful move to overcome the debit.
- Put skew can make both legs richer than expected.
Tips
- Don't get cute with strikes — your short put is your target, set it accordingly.
- Close at 50–75% of max profit.
- Consider rolling the short put down on follow-through to keep capturing downside.
The math
P/L per share at expiry = min(long_strike − spot, long_strike − short_strike) − debit, floored at −debit. Break-even = long_strike − debit. Max profit = (long_strike − short_strike) − debit.
Not investment advice.
