Bear Put Spread Strategy
Moderately BearishIntermediateVertical Spread
Buy a put and sell a lower strike put to reduce cost and limit profit potential.
How It Works
1
Buy Put (Higher Strike): Purchase a put option at the higher strike price.
2
Sell Put (Lower Strike): Sell a put option at the lower strike price.
3
Profit Zone: Make money when stock falls to between the two strikes.
Key Metrics
Max Profit:Strike Spread - Net Debit
Max Loss:Net Debit Paid
Breakeven:Higher Strike - Net Debit
Best Case:Stock at or below lower strike
Worst Case:Stock above higher strike at expiration