Bear Put Spread
A bear put spread buys a higher put and sells a lower put to bet on a fall cheaply. Learn how it works, your max profit and loss, and when to use it.
A bear put spread is a bearish trade where you buy one put and sell a lower-strike put at the same expiration. You pay to enter, but the put you sell lowers your cost. In return, your profit is capped. It is the cheaper, defined-risk way to bet a stock will fall.
It is the exact mirror of the bull call spread, just pointed downhill. Let me show you.
Cheaper Bearish Bet
You think Apple is heading lower, but a plain $200 put costs $8 a share, which is $800. To spend less, you build a bear put spread: keep the put you want, and sell a lower put to help pay for it.
The lower put brings in premium that offsets your cost. Selling it caps your gains below that lower strike, but it makes the trade much cheaper and defines your risk cleanly. You give up the deep-crash payoff in exchange for a lower price of entry. It is a vertical spread, built from two puts.
Watch It Work
Apple is at $200. You build the spread:
- Buy the $200 put for $8 a share
- Sell the $190 put for $3 a share
- Net cost: $8 minus $3, which is $5 a share, or $500
You cut your cost from $800 to $500. Now the outcomes.
Apple falls to $190 or lower. Your $200 put is worth $10, the full gap between the strikes. After your $5 net cost, you keep $500. That is your maximum, no matter how far Apple drops, because the $190 put you sold caps you there.
Apple stays at $200 or above. Both puts expire worthless. You lose your $5 net cost, which is $500. That is your maximum loss.
When to Use It
A bear put spread fits when you are bearish but want to spend less and cap your risk.
It works best for a moderate decline, not a total collapse. You cap your gains below the lower strike, so if you truly expect a crash to zero, a plain long put keeps more of that downside open. But for a measured "I think this slides down to about $190," the spread is cheaper, has defined risk, and often offers a better risk-reward for the move you actually expect.
- A bear put spread buys a higher put and sells a lower put.
- It is a cheaper, bearish trade with defined risk.
- Max profit is the strike gap minus net cost; max loss is the net cost.
- Best for a moderate decline, not a total crash.
Pop Quiz
Three quick questions to see what stuck. Pick an answer and the explanation shows up right away.
How do you build a bear put spread?
You buy the higher put and sell the lower one. The sold put cuts your cost and caps your profit.
Buy the $200 put for $8, sell the $190 put for $3. What is your max profit?
The $10 strike gap minus your $5 net cost is $5 a share, or $500. That is the capped maximum.
When does this spread fit best?
The capped downside makes it ideal for a measured drop. For a total collapse, a plain long put keeps more upside.
Bottom Line
A bear put spread is the budget-friendly bearish trade. You buy a put and sell a lower one, cutting your cost and boxing in your risk. If the stock falls to the lower strike, you collect your capped max profit. If it holds up, you lose only your net cost.
It is the tool for a moderate decline: cheaper than a plain put, with a clearly defined worst case and best case from the moment you enter.
Keep going: the general shape is the vertical spread, and the bullish mirror is the bull call spread.