Bear Put Spread Strategy — Guide, Payoff & Calculator

A bear put spread is a defined-risk bearish options strategy built by buying a put and simultaneously selling a lower-strike put in the same expiration. Compared to buying a single put, the short put lowers cost and sets a known profit cap.

Use the interactive chart below or jump to the setup guide to select strikes and expiration with a clear risk budget.

Interactive Payoff Chart

When to Use a Bear Put Spread

• Outlook: Moderately bearish; seeking a move into a target zone.
• Liquidity: Tight bid-ask spreads and healthy open interest on both legs.
• Volatility: Net vega typically positive; can benefit from IV expansion.
• Catalysts: Trend breakdowns, negative guidance, macro shocks with bounded ranges.

Setup: Strikes, Expiration, Sizing

Strike Selection

1. Long put: ~0.50–0.65 delta (ATM to slightly ITM/OTM).
2. Short put: ~5–10% below spot (check skew/liquidity).
3. Width: Choose a spread width appropriate to budget and target zone.
4. Check fills: Use limit orders; avoid wide markets.

Expiration

• Commonly 30–60 DTE to balance theta decay and time to thesis.
• Align to your catalyst window and risk tolerance.

Risk Sizing

Max loss equals the net debit. Size positions so that a full loss is acceptable within your portfolio risk budget.

Prefer a guided workflow? Try the Bear Put Spread Calculator to visualize outcomes and compare alternatives.

Payoff, Breakeven & Greeks

• Max Profit: (Higher strike − lower strike) − net debit.
• Max Loss: Net debit (plus fees).
• Breakeven: Higher strike − net debit.

Greeks (at inception)

• Delta: Negative; gains if price falls.
• Theta: Often negative; time decay hurts if price drifts sideways/up.
• Vega: Typically positive net; IV rises can help the long leg.
• Gamma: Highest near the long strike as price approaches from above.

Management & Exits

• Profit taking: Consider partial or full exit when price reaches your target zone.
• Time-based: Many traders exit 7–10 days before expiration to reduce tail risks.
• Adjustments: Roll down/out if thesis remains intact and pricing justifies costs.
• Assignment: Monitor short put near expiration if ITM; manage collateral and intent.

Worked Example (Illustrative)

Underlying at $100. Buy the $100 put, sell the $90 put in the same expiry for a $3.50 net debit.

• Max profit: $10 − $3.50 = $6.50 per spread.
• Max loss: $3.50 per spread.
• Breakeven: $96.50 at expiration.

Outcomes vary with price/IV/time. Use the calculator to test scenarios and exit rules before committing capital.

Frequently Asked Questions

Disclaimer

This page is for educational purposes only and is not investment advice. Options involve risk and are not suitable for all investors. Consider consulting a qualified professional. Examples are illustrative and exclude fees/slippage.

Sources & further reading: Cboe Options Education · OCC Investor Resources