Bear Put Spread¶
A bear put spread is a defined-risk options strategy that profits from a decline in the underlying stock price. The trader buys a put at a higher strike and sells a put at a lower strike, both sharing the same expiration date, for a net debit. Maximum profit is capped at the spread width minus the net debit; maximum loss is limited to the net debit paid.
HOW IT WORKS¶
The strategy is entered for a net debit equal to the premium of the long put minus the premium of the short put. Breakeven at expiration equals the higher strike minus the net debit. Maximum profit is realized when the stock closes at or below the lower strike, and equals the spread width minus the net debit. The short put offsets part of the long put's time decay and reduces the upfront cost, but it also caps the gain below the lower strike.
| Metric | Formula |
|---|---|
| Net Debit | Long Put Premium − Short Put Premium |
| Breakeven | Higher Strike − Net Debit |
| Max Profit | (Higher Strike − Lower Strike) − Net Debit |
| Max Loss | Net Debit |
IN TAPEBOARD¶
In the Tapeboard terminal, bear put spreads appear in the positions ladder with each leg displayed individually and the combined P&L tracked as a single spread position. The payoff diagram updates in real time as the underlying moves, showing the breakeven level and the max profit zone relative to the current price. Traders can screen for bear put spread setups using the options flow scanner, filtering by net debit, spread width, and days to expiration to identify setups where the risk-to-reward ratio meets a defined threshold.