Stock Market · Option Strategies

Bull put spread

A bull put spread is a credit spread. You collect premium upfront and keep it if the market stays above your short strike.

Construction

Example: Nifty at 22,000.

• Sell 21,800 put @ ₹120 (collect premium)
• Buy 21,500 put @ ₹60 (pay premium, protection leg)
• Net credit received: ₹120 − ₹60 = ₹60

Payoff

• Maximum profit: ₹60 × 75 = ₹4,500 (if Nifty stays above 21,800)
• Maximum loss: (21,800 − 21,500) − 60 = ₹240 × 75 = ₹18,000
• Breakeven: 21,800 − 60 = 21,740

> You profit if Nifty stays above 21,740. Below 21,500, maximum loss is hit.

Bull call spread vs bull put spread

Bull call spreaddebit (you pay premium), neutral-to-bullish

Bull put spreadcredit (you collect premium), neutral-to-bullish

The bull put spread benefits from time decay (theta works in your favour because you sold net premium). The bull call spread suffers from theta.

When to use

Use the bull put spread when you expect markets to stay flat or rise moderately and you want theta working FOR you. Ideal in high IV environments. You collect more premium when IV is elevated.

Risk

The max loss is the spread width minus credit received. Always know this before entering.

Takeaway. Bull put spread collects credit upfront. Profit if the market stays above the short put strike. Theta helps you. Max loss = spread width minus credit. Great in high-IV sideways markets.