Bear Put Spread
Buy a put and sell a lower-strike put for a cheaper, capped bearish bet with fully defined risk.
What is a Bear Put Spread?
A Bear Put Spread (debit put spread) is the bearish twin of the bull call spread. You buy a higher-strike put and sell a lower-strike put of the same expiry. The short put reduces the cost of the long put and caps the profit at the lower strike. It expresses a controlled bearish view with defined, limited risk — cheaper than a naked put and less exposed to volatility crush.
Payoff Diagram
Profit & Loss at expiry
Per share (multiply by lot size 75). Gold dots mark breakeven points; green = profit, red = loss.
Construction
- Buy 1 ATM/ITM Put (higher strike).
- Sell 1 OTM Put (lower strike), same expiry.
- Net debit paid = maximum loss.
When to Use It
Use when you expect a limited decline to a target support level. Attractive when put IV is high, since you sell expensive downside premium against your long put.
The Greeks
Negative Delta, muted Gamma/Vega/Theta relative to a naked put.
Risks & Considerations
- Profit capped at the lower strike.
- Loses the full debit if the underlying stays above the higher strike.
- Assignment risk on the short put if it goes deep ITM (stock options).
Worked Example (Nifty)
Illustrative trade — lot size 75
Nifty 20,000. Buy 20,000 PE ₹200, sell 19,600 PE ₹90. Net debit ₹110 (₹8,250). Max profit = (400 − 110) × 75 = ₹21,750 at/below 19,600. Max loss ₹8,250 above 20,000. Breakeven = 19,890.