Bear Put Spread
Long Put Vertical · Debit Put Spread
Overview
A bear put spread is the downside mirror of the bull call spread. You buy a put at a higher strike and sell a put at a lower strike to cheapen the position. It is a defined-risk way to play a controlled decline to a target.
The sold put reduces your cost and, in exchange, caps how much you can make once price falls past the lower strike. Both the maximum gain and the debit at risk are known from the outset.
How it’s built
Buy 1 higher-strike put (near the money) and sell 1 lower-strike put, same expiry. The strike gap is the spread width within which your outcome is determined.
| Action | Option | Strike | Premium | Role |
|---|---|---|---|---|
| Buy | Put (PE) | 24,000 | 170 | Buy — primary directional leg |
| Sell | Put (PE) | 23,800 | 80 | Sell — finances the long put |
Payoff at expiry
The diagram is computed from the legs above on an illustrative NIFTY 50 snapshot — spot 24,000, one lot of 75.
Worked example — NIFTY 50
NIFTY is at 24,000 and you expect a slide toward 23,800 support. You buy the 24,000 put for 170 and sell the 23,800 put for 80, a net debit of 90 points (₹6,750 per lot).
Below 23,800 the spread reaches its full 200-point width and you earn the width minus the debit. Above 24,000 both puts expire worthless and you forfeit only the 90-point debit. The trade is profitable below the 23,910 breakeven.
At expiry
| If the market… | Outcome |
|---|---|
| NIFTY closes ≤ 23,800 | Full profit — spread at maximum value |
| NIFTY closes at 23,910 | Breakeven — gains offset the debit |
| NIFTY closes ≥ 24,000 | Maximum loss — limited to the debit paid |
Greeks & behaviour
When to use it
- You expect a measured decline to a defined level, not a crash.
- You want put exposure without paying full outright premium.
- You want a capped, known loss instead of open-ended cost.
Risks & caveats
- Profit is capped below the short strike — a market crash earns no more than the width.
- A flat or rising market decays the debit away.
- Timing matters; a delayed decline can still finish out of the money.
Key takeaways
- A risk-defined, lower-cost alternative to buying a put.
- Outcome is fixed within the strike band at entry.
- Suited to a controlled move down to support, not a tail event.
Test this on live data
Load the Bear Put Spread preset in the Strategy Builder to see real strikes, premiums and a live payoff graph.
Educational content only — not investment advice or a recommendation. All strikes, premiums and figures are illustrative and do not reflect live market quotes. Options carry significant risk; consult a registered adviser before trading.