Bull Put Spread

Profile Version / Simplified Version / Comprehensive Version

Purpose Of Bull Put Spread
1. To Profit From Rising Stocks
2. To Profit From Stagnant Stocks Through Time Decay

Expectation Of Bull Put Spread
Up and Stagnant

Type Of Spread
Credit Spread

How To Use Bull Put Spread?
Buy Out of The Money (OTM) put option while simultaneously selling In the Money (ITM) put option on the same underlying asset with the same expiration month.

Buy OTM Put Option + Sell ITM Put Option

Learn How To Read This Chart

Profit Potential of Bull Put Spread:
Being a credit spread, the maximum profit potential of a Bull Put Spread is the net credit gained when the position is put on. This occurs when the short put option expires out of the money after the underlying asset rises beyond the strike price of the short put option.

Personal Option Trading Mentor
Find Out How My Students Make Over 87% Profit Monthly,
Confidently, Trading Options In The US Market!

Profit Calculation of Bull Put Spread:
Maximum Return = Net Credit

Risk / Reward of Bull Put Spread:

Upside Maximum Profit: Limited

Maximum Loss: Limited

Break Even Point of Bull Put Spread:

BEP: higher Strike - Net credit

Advantages Of Bull Put Spread :

Loss is limited if the underlying financial instrument falls instead of rise.

If the underlying instrument fails to rise beyond the strike price of the out of the money short put option, the profit yield will be greater than just buying call options.

Able to profit even when the underlying asset remains completely stagnant.

Disadvantages Of Bull Put Spread :

There will be more commissions involved than simply buying call options or just selling naked put options.

Lower risk than simply writing naked put options as maximum downside is limited by the long ATM/OTM put option.

There will be no more profits possible if the underlying asset rises beyond the strike price of the short put option.

Because it is a credit spread, there is a margin requirement in order to put on the position.

As long as the short put options remain in the money, there is a possibility of it being assigned. You may then have to purchase the underlying stock to meet the short put obligation.

Trade Bull Put Spreads With Best Options Broker, OptionsXpress!

Don't Know If This Is The Right Option Strategy For You? Try our Option Strategy Selector!

Continue your journey of discovery...

Click Above For Content Index

Questions? | Suggestions?
What Is Bull Call Spread?
What Is Bull Ratio Spread?
What Is Short Bull Ratio Spread?
What Is Naked Put Write?
What Is Buy Call Option / Long Call Option?
What Is Calender Call Spread?
Back To Strategies Page
Stock Options
Options Trading

Back To Main | Go To Option Trader's HQ

Enter your search terms Submit search form

Web optiontradingpedia.com

Important Disclaimer: Options involve risk and are not suitable for all investors. Data and information is provided for informational purposes only, and is not intended for trading purposes. Neither optiontradingpedia.com, mastersoequity.com nor any of its data or content providers shall be liable for any errors, omissions, or delays in the content, or for any actions taken in reliance thereon. Data is deemed accurate but is not warranted or guaranteed. optiontradinpedia.com and mastersoequity.com are not a registered broker-dealer and does not endorse or recommend the services of any brokerage company. The brokerage company you select is solely responsible for its services to you. By accessing, viewing, or using this site in any way, you agree to be bound by the above conditions and disclaimers found on this site.

Copyright Warning: All contents and information presented here in optiontradingpedia.com are property of Optiontradingpedia.com and are not to be copied, redistributed or downloaded in any ways unless in accordance with our quoting policy. We have a comprehensive system to detect plagiarism and will take legal action against any individuals, websites or companies involved. We Take Our Copyright VERY Seriously!