# Bull Put Spread

> A bull put spread sells a put and buys a lower strike put for a net credit. Learn the payoff, probability, strike and width choices, and how to manage losers.

Source: https://learn.tradelabsai.com/options/bull-put-spread/  
Track: Options · Level: Advanced · Updated: 2026-10-03  
Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice.  
Cite as: TradeLabs Learn, "Bull Put Spread", https://learn.tradelabsai.com/options/bull-put-spread/

A bull put spread, also called a short put spread or put credit spread, sells a put at one strike and buys a put at a lower strike with the same expiration. You receive a net credit when you open the trade. If the underlying stays above the higher (short) strike through expiration, both puts expire worthless and you keep the credit. The long put caps your loss if the market falls. It is a popular way to sell premium with defined risk.

## Construction

1. **Sell a put** at a higher strike, usually out of the money.
2. **Buy a put** at a lower strike for protection.
3. **Same underlying and expiration.**
4. **Receive a net credit.**

## Payoff at a glance

| Feature | Bull put spread |
|---|---|
| Outlook | Neutral to bullish |
| Maximum gain | Net credit |
| Maximum loss | Strike width minus net credit |
| Break even at expiry | Short strike minus net credit |
| Time decay | Helps (when out of the money) |
| Rising implied volatility | Hurts |

## Worked example

**Example: Selling a put spread**
A stock trades at $150. You think it will stay above $140 for the next month. You sell the $140 put for $2.10 and buy the $135 put for $1.10. Net credit: $1.00 ($100 per spread).

| Stock at expiry | Result per spread |
|---|---|
| $140 or above | +$100 (keep the full credit) |
| $139 | $0 (break even) |
| $137 | minus $200 |
| $135 or below | minus $400 (maximum: $5 width minus $1 credit) |

You risk $400 to make $100. That only makes sense if the chance of finishing above $140 is well above 80%, after costs.

## Probability and reward

Credit spreads have high win rates and poor reward to risk ratios. The market prices them so that, before costs, expected value is close to zero; your edge must come from good judgement about direction or volatility, or from the volatility risk premium. See [Expected Value](https://learn.tradelabsai.com/math/expected-value/) and [Theta Harvesting](https://learn.tradelabsai.com/options/theta-harvesting/).

```
break even win rate ≈ max loss / (max loss + max gain)
```

In the example, 400 / (400 + 100) = 80%. The short put's delta (perhaps around 0.20) suggests roughly an 80% chance of finishing above $140, which shows how fairly priced such spreads usually are.

## Choosing strikes and width

| Choice | Effect |
|---|---|
| Short strike further out of the money | Higher win rate, smaller credit |
| Short strike closer to the money | Larger credit, lower win rate |
| Wider spread | Larger credit and larger maximum loss |
| Narrower spread | Smaller of each |

Many traders place the short strike below a support level or at around 0.20 to 0.30 delta. See [Support and Resistance](https://learn.tradelabsai.com/price-action/support-and-resistance/) and [Delta](https://learn.tradelabsai.com/options/delta/).

## Managing the trade

- **Take profits at 50% to 75%** of the credit rather than waiting for expiry.
- **Define a loss point,** such as when the spread's value reaches two times the credit, or when the stock breaks the short strike.
- **Roll down and out** if challenged: close and open a new spread at lower strikes and a later expiry, ideally for a credit.
- **Avoid holding through earnings** unless intended. See [Earnings Trading](https://learn.tradelabsai.com/strategies/earnings-trading/).

## Bull put spread vs cash secured put

| | Bull put spread | Cash secured put |
|---|---|---|
| Capital needed | Width minus credit | Strike × 100 minus premium |
| Maximum loss | Capped | Strike minus premium |
| Credit | Smaller | Larger |
| Goal | Collect premium | Premium or buy the stock |

See [Cash-Secured Put](https://learn.tradelabsai.com/options/cash-secured-put/).

## Assignment

If the short put goes deep in the money, it may be assigned early, leaving you long shares. Your long put still caps the loss. Close or exercise as needed. See [Exercise and Assignment](https://learn.tradelabsai.com/options/exercise-and-assignment/).

## Common mistakes

- **Selling spreads with very small credits** relative to risk.
- **Holding losing spreads to maximum loss** without a plan.
- **Selling many correlated spreads,** which all lose together in a selloff.
- **Ignoring costs:** commissions on four legs (to open and close) eat into small credits.

## Frequently asked questions

### What is a bull put spread?

Selling a put and buying a lower strike put with the same expiry for a net credit, profiting if the underlying stays above the short strike.

### What is the maximum loss on a bull put spread?

The difference between the strikes minus the credit received, multiplied by the contract size.

### Is a bull put spread a good strategy?

It offers defined risk and a high win rate, but losses are larger than gains, so it needs careful strike selection, sizing and loss management.

Next, learn the bearish credit spread in [Bear Call Spread](https://learn.tradelabsai.com/options/bear-call-spread/).

## Continue learning

- Next lesson: [Bear Call Spread](https://learn.tradelabsai.com/options/bear-call-spread/)
- Previous lesson: [Bear Put Spread](https://learn.tradelabsai.com/options/bear-put-spread/)
- Related: [Bear Put Spread](https://learn.tradelabsai.com/options/bear-put-spread/): A bear put spread buys a put and sells a lower strike put to cut cost and cap profit. Learn the payoff, break even, strike choice and use as a hedge.
- Related: [Short Put](https://learn.tradelabsai.com/options/short-put/): A short put sells a put option to collect premium, profiting if the price stays above the strike. Learn the payoff, risks, margin and how it can buy stock.
- Related: [Bull Call Spread](https://learn.tradelabsai.com/options/bull-call-spread/): A bull call spread buys a call and sells a higher strike call to cut cost and cap profit. Learn the payoff, break even, strike selection and how to manage it.
- Related: [Cash-Secured Put](https://learn.tradelabsai.com/options/cash-secured-put/): A cash secured put sells a put while holding cash to buy the shares if assigned. Learn the payoff, the wheel strategy, strike choice and the risks involved.
- Related: [Iron Condor](https://learn.tradelabsai.com/options/iron-condor/): An iron condor sells a put spread and a call spread to profit if price stays in a range. Learn the payoff, strike and width choices, adjustments and the main risks.
- Related: [Theta Harvesting](https://learn.tradelabsai.com/options/theta-harvesting/): Theta harvesting sells options to collect time decay and the volatility risk premium. Learn the evidence, the common structures and how to survive the tail risk.