Bull Put Spread — Options Strategy

A bull put spread is a credit strategy for traders with a moderately bullish or neutral outlook. You sell a put at a higher strike and buy a put at a lower strike—both with the same expiration—collecting a net credit at entry. The maximum profit is the credit received; the maximum loss is the spread width minus the credit, both occurring at defined price levels.

Bull put spreads profit in three market scenarios: if the stock rises, stays flat, or even falls moderately but stays above the short put strike by expiration. This makes them one of the most versatile neutral-to-bullish strategies—you collect premium simply for the stock not making a big downside move. The probability of profit is typically 70% or higher when strikes are placed 1-1.5 standard deviations below the current price.

The short put (sold at the higher strike) collects the premium and defines the level below which the trade starts losing. The long put (bought at the lower strike) acts as a safety net, capping the maximum loss if the stock falls sharply. This defined risk makes bull put spreads accessible to traders who cannot or will not hold unlimited-risk positions.

Strike selection involves the same principles as other credit spreads: target the short put at a delta of -0.20 to -0.35 (25-35% OTM probability of expiring ITM) with the long put typically 5-10 points lower. The credit received is typically 25-35% of the spread width—enough to make the trade worthwhile while maintaining a high probability of success. Selling bull put spreads when IV rank is elevated generates better credits with the same strike placement.

Management follows the same guidelines as most credit spreads: close at 50% of maximum credit to lock in profit and free capital, and close or roll if the stock approaches the short strike with significant time remaining. Early management protects against dramatic reversals while still capturing the bulk of the available premium.