Bear Put Spread: A Defined-Risk Bearish Strategy
A bear put spread is a debit strategy for a moderately bearish view with capped risk and reward. Here's how to build it, with max profit, loss and break-even.
Short answer: A bear put spread (a put debit spread) is built by buying a higher-strike put and selling a lower-strike put of the same expiry. You pay a net debit and profit when the underlying falls — with both maximum profit and loss capped. It's a cheaper, defined-risk alternative to buying a put outright.
How to build it
- Buy 1 put at a higher strike (closer to the money).
- Sell 1 put at a lower strike (further out) — offsets cost.
- Same expiry → net debit.
The numbers
| Metric | Formula |
|---|---|
| Net cost | Debit paid |
| Max profit | (Higher strike − Lower strike) − Net debit |
| Max loss | Net debit |
| Break-even | Higher strike − Net debit |
You make the most if the underlying closes at or below the lower strike; you lose the debit if it closes at or above the higher strike.
When to use it
A bear put spread suits a moderately bearish view. Selling the lower put cuts your cost and time-decay drag versus a naked long put, at the cost of capping how much you can make on a big drop.
Related structures
- The bullish mirror is the bull call spread.
- For a credit bearish play, see the bear call spread.
FAQ
Bear put spread vs buying a put? The spread is cheaper and decays slower but caps your downside profit. Use it for a measured decline.
What's my risk? Limited to the net debit — known and capped up front.
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