Bull Put Spread: Credit Spread for Bullish-to-Neutral Markets

A bull put spread sells a higher-strike put and buys a lower-strike put at the same expiration. Net credit. Max gain = credit received. Max loss = strike width minus credit. Profits if the stock stays above the short strike. Probability-of-profit favored, max gain capped.

The math: at typical 0.30 delta short put and 5-point wide structure, you collect roughly $1 of credit on a $5-wide spread. Risk is $4, reward is $1, probability of profit is roughly 70%. Expected value works out positive when IV rank is above ~40 — the higher the IV at entry, the better the math. This is the workhorse strategy for premium sellers who want defined risk.

Setup: 30–45 DTE, sell the 0.20–0.30 delta put, buy the next strike or two below for protection. Take profit at 50% of max gain. Stop loss at 200% of credit received (i.e., a $1.00 credit becomes a $2.00 loss before you cut). Avoid running into expiration week — gamma exposure spikes and a single move through the short strike can turn a winning position into max loss in hours.

Frequently Asked Questions

How much capital does a bull put spread require?

Strike width × 100 minus the credit received. A 5-wide spread with $1 credit requires $400 of buying power per contract.

Should I let the spread expire worthless?

Generally no — close at 50% of max profit. The remaining premium takes most of the time and adds gamma risk.

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