Bull Put Spread: Collect Income If the Stock Stays Up
You think the stock will stay above a certain price. A bull put spread lets you get paid for that view: sell a put, buy a lower one, and pocket the credit. Your profit is capped at the credit, but your loss is also capped.
- Exactly what you sell and buy, and the net credit
- The payoff: income if the stock holds, defined loss if it falls
- Your numbers: max profit, max loss, and break-even
- When a bull put spread is the right income play, and when a naked put makes more sense
A bull put spread is income with a safety net. You expect the stock to stay above a certain price, so you sell a put there and collect premium. To limit your downside, you buy a put at a lower strike. The credit you collect is your profit if the stock cooperates. Your loss is capped if it does not.
What You Actually Do
You expect Apple to stay above $190, or at least not fall much below it. It trades at $200. You sell one $190 put for $3 a share, $300, and simultaneously buy one $180 put for $1 a share, $100.
Your net credit: $300 minus $100 = $200. That is your max profit, and it is yours to keep if Apple stays above $190. If it crashes below $180, the long put protects you, capping your loss at $800 (the $1,000 gap between strikes minus the $200 credit you keep).
The Payoff, Drawn
Drag the slider to see how you do at every ending price for Apple.
The shape tells the whole story. On the right a flat ceiling: above $190 both puts expire worthless and you keep the full $200 credit. In the middle a downward slope: between $190 and $180 your profit shrinks. On the left a flat floor: below $180 the long put stops the bleeding and caps your loss at $800.
The Safety Net: Trading Credit for Defined Risk
A bull put spread is a short put with a floor.
A naked short put can lose up to $19,000 if the stock crashes to zero and you get assigned at $190. A bull put spread buys a $180 put, which means if the stock falls below $180, you can exercise that put and sell at $180, capping your loss at $800 (the $10 gap plus the $100 you paid for the long put, minus the $200 credit you collected).
That safety net costs you credit. Instead of collecting $300 on the short put alone, you collect only $200. But you sleep at night knowing your max loss is exactly $800, and you know it before you enter.
When a Bull Put Spread Fits
- You are bullish or neutral and want steady income
- You want defined risk and a known max loss
- You want sleep-at-night insurance on your short put
- You expect a hard drop and want to avoid the position entirely
- You need maximum credit and the long put eats too much of it
- The long put is so cheap it is almost worthless as protection
The bull put spread is for the trader who wants income but wants to sleep at night. It is not for the greedy or the fearless.
A Worked Example
Walk the same trade through three endings: you sold the $190 put for $300 and bought the $180 put for $100, collecting $200 net.
Apple stays at $200. Both puts expire worthless, you keep the $200 credit, and you can do this again next month. Pure income for your bullish view being right.
Apple dips to $185. The short $190 put is in the money by $5, $500. The long $180 put is in the money by $0 (it is at the strike). Your spread is worth about $500. You collected $200, so you are down about $300. The short put hurt you, but the long put limited the damage. A naked short put at this level would be down $5 a share, $500.
Apple crashes to $170. Both puts are in the money. The short $190 put is down $20, $2,000. The long $180 put is down $10, $1,000. Your spread is worth $1,000. You collected $200, so your net loss is $800, your max. A naked short put at this level would be down $2,000. The long put saved you $1,200.
That is the bull put spread in three outcomes: full credit on a rise, partial credit on a modest drop, and a capped loss on a crash.
- A bull put spread is selling a put and buying a lower put: income with insurance.
- Max profit is the net credit; max loss is the strike gap minus the credit.
- The long put is your safety net, capping your loss at a known level if the stock crashes.
- It fits bullish or neutral stocks where you want income and sleep at night; it lags on huge drops.
Pop Quiz
Two quick checks. Pick an answer and the explanation shows up right away.
You sell the $190 put for $3 and buy the $180 put for $1. What is your max profit?
Your max profit is the net credit: $300 you collected minus $100 you paid = $200. Above $190, both puts expire worthless and you pocket the full credit.
In that same spread, what is your max loss?
Max loss is the gap minus the credit: ($190 - $180) × 100 = $1,000, minus the $200 you collected = $800. The long put stops the bleeding.
Bottom Line
A bull put spread is the income trader's safe play: sell premium, buy insurance, cap your loss, and keep the credit. Your profit is smaller than a naked put, but your sleep is better and your max loss is known upfront. Master both the bull call spread and the bull put spread, and you have the two fundamental defined-risk strategies. Reach for a bull put spread when you want steady bullish income with a safety net.