Bull Put Spread
A bull put spread sells a higher put and buys a lower put, collecting premium you keep if the stock stays up. Learn how this bullish income trade works.
A bull put spread is a bullish trade where you sell a higher-strike put and buy a lower-strike put at the same expiration. You collect premium up front, and you keep it as long as the stock stays above the higher strike. It is a defined-risk way to earn income when you think a stock will hold up.
Unlike the debit spreads, this one pays you to enter. That flips how it works. Let me show you.
Getting Paid to Be Bullish
Most bullish trades cost money. This one is different: you get paid up front. You sell a put (collecting premium) and buy a lower put (spending a little to cap your risk). The net is a credit, cash that lands in your account the moment you open the trade.
Your bet is simple: the stock stays above the put you sold. If it does, both puts expire worthless and you keep the whole credit. The lower put you bought is your insurance, capping the loss if the stock falls hard. It is a vertical spread, and because it brings in a credit, it is called a credit spread.
Watch It Work
Apple is at $200 and you think it holds steady or rises. You build the spread:
- Sell the $190 put for $4 a share
- Buy the $185 put for $2 a share
- Net credit: $4 minus $2, which is $2 a share, or $200 collected now
The strikes are $5 apart. Now the outcomes.
Apple stays above $190. Both puts expire worthless. You keep the full $200 credit. That is your maximum profit, and it is the ideal outcome.
Apple falls below $185. Both puts are in the money. The $5 strike gap works against you, but the put you bought caps it. Your max loss is the $5 gap minus the $2 credit, which is $3 a share, or $300. Bounded and known from the start.
When to Use It
A bull put spread fits when you are neutral to bullish: you think the stock will stay flat or rise, and you want to get paid for that view with a known, capped risk.
It profits from the stock simply not falling, so it can win even if the stock goes nowhere. That is its appeal over a debit spread, which needs an actual move. The trade-off is the classic credit-spread shape: you usually win a smaller amount often, and your occasional loss is larger than the credit. Sell these on stocks you are comfortable holding above the short strike.
- A bull put spread sells a higher put and buys a lower put for a credit.
- It is neutral to bullish: you profit if the stock stays up.
- Max profit is the credit; max loss is the strike gap minus the credit.
- It can win even if the stock goes nowhere.
Pop Quiz
Three quick questions to see what stuck. Pick an answer and the explanation shows up right away.
How do you build a bull put spread?
You sell the higher put and buy the lower one, netting a credit. The bought put caps your risk.
You collect a $200 credit. What is your max profit?
On a credit spread, the credit is the most you can make, kept if both puts expire worthless.
What does this trade need to profit?
It wins as long as the stock stays above the put you sold, so it can profit even if the stock goes nowhere.
Bottom Line
A bull put spread pays you to be neutral-to-bullish. You sell a higher put and buy a lower one, collect a credit, and keep it if the stock stays above your short strike. The bought put caps your loss if you are wrong.
It is an income trade with defined risk that can win even in a flat market, which is exactly why it is a staple for traders who want to get paid without needing a big move.
Keep going: the general shape is the vertical spread, and the bearish credit mirror is the bear call spread.