Strategy Overview
Medium RiskIntermediateBearish
A bear put spread is a debit spread that profits from downward movement. You buy a put at a higher strike and sell a put at a lower strike, reducing your cost while defining maximum risk.
Max Profit
Width of spread - premium paid
Max Loss
Premium paid
Breakeven
Higher strike - premium paid
Probability
~45% win rate
hist. est.
Loading chart...
Example Setup Calculator
$
Debit Paid
$200
Max Profit
$300
Max Loss
$200
Breakeven
$102.00
Strategy Components
BUY ATM PUT
Buy ATM or slightly OTM put
SELL OTM PUT
Sell further OTM put
When to Use
- You expect the stock to decline moderately
- You want to reduce the cost of buying puts
- You want defined risk and reward
- IV is relatively high
Best Market Conditions
- Bearish trend or breakdown
- Moderate to high IV
- Clear support levels for short strike
Best Practices
- Choose spread width based on expected move
- Look for stocks showing weakness
- Place short strike below key support
- Consider closing at 50% profit
Ready to Trade?
Review Bear Put Spread and practice it in paper trading with the school workflow.
Paper Trading