Put Back Spread Strategy
Very BearishAdvancedBack Spread
Unlimited downside potential from large moves down with limited risk and often net credit.
How It Works
1
Sell Higher Strike: Sell fewer puts at higher strike for premium collection.
2
Buy Lower Strikes: Buy more puts at lower strike (typically 2:1 ratio).
3
Profit from Movement: Unlimited profits if stock moves significantly lower.
Key Metrics
Max Profit:Unlimited below lower breakeven
Max Loss:At lower strike price
Upper Breakeven:Higher Strike - Net Premium
Lower Breakeven:Lower Strike - Max Loss
Best Case:Large downward movement