The bull put spread (put credit spread)
The bull put spread — also called a put credit spread — is a bullish-to-neutral trade that pays you up front. You sell a put and buy a lower-strike put as protection. You keep the net credit if the stock stays up, and the long put caps your loss if it falls. It is the defined-risk way to sell premium.
How it is built
Two puts, same expiration: sell the higher strike, buy the lower. Stock at $100: sell the $100 put for $5, buy the $90 put for $2, net credit $3. That $3 is your maximum profit, kept if the stock finishes at or above $100. If it falls below $90, you lose the $10 width minus the $3 credit = $7 — your capped maximum loss. Breakeven is $97.
| Outlook | Neutral to bullish |
|---|---|
| Max profit | Net credit = $3/share, at or above $100 |
| Max loss | (Strike width − net credit) = $7/share, at or below $90 |
| Breakeven | Higher strike − net credit = $97 |
| Time decay (theta) | Works for you — net short premium |
You think the stock will hold above $100. Rather than buy a call and fight time decay, you sell the $100–$90 put spread for a $3 credit. As long as the stock stays above $100, all three Greeks work with you: theta decays the short put in your favor, and you simply keep the credit. You risk $7 to make $3 — a worse ratio than a debit spread — but you win in three scenarios (up, flat, or mildly down), not just one. High implied volatility fattens the credit, which is why sellers prefer to strike when volatility is rich.
When to use it
Use a bull put spread when you’re neutral to bullish and want to profit from time and a stock simply not falling. It is a favorite when implied volatility is high — you collect a larger credit for the same strikes, and benefit as volatility deflates. Reading whether volatility is elevated is central to timing these credit trades well.
Common pitfalls
Ignoring the risk/reward. Credit spreads often risk more than they can make. A string of small wins can be erased by one loss if you size them carelessly.
Selling when volatility is low. Thin credits give little cushion for the risk you’re taking. Sell premium when it’s rich, not cheap.
What to do with this
A bull put spread pays you to be patient and bullish, with a hard cap on the downside. Its bearish counterpart — selling a call spread — is next.
Its bearish counterpart is the bear call spread — collect premium betting a stock won’t rise.
Next lesson · continue the courseOn to the bear call spread →