Bear Put Spread

A bear put spread is a bearish strategy created by buying a put option with a higher strike price and selling a put option with a lower strike price, both with the same expiration. This is a debit spread because the purchased put is more expensive than the sold put.

The strategy profits if the underlying asset price falls toward the lower strike price. It limits the maximum profit to the difference between the strikes minus the net debit paid.

The maximum loss is limited to the net debit paid to enter the position. It is used by traders who are moderately bearish and want to lower the cost of a long put position.