Bear Put Spread Calculator

Bear Put Spread

A bear put spread is a defined-risk options strategy used when you are moderately bearish on a stock. You buy a put at a higher strike (K1) and sell a put at a lower strike (K2) with the same expiration. The premium received for the sold put reduces the cost of the bought put.

Key levels:

P&L at expiration:

• Stock at or above K1: Full net premium lost (max loss)
• Stock between K1 and K2: Partial profit: (K1 - S - Net premium) × 100
• Stock at or below K2: Maximum profit locked in

Example:

• Buy 150 put at $7.00, sell 140 put at $2.50
• Net premium = $7.00 - $2.50 = $4.50 per share ($450 per contract)
• Breakeven = 150 - 4.50 = $145.50
• Max profit = (150 - 140 - 4.50) × 100 = $550 per contract
• Max loss = $450 per contract

Bear put spread vs buying a put outright:

• Costs less: the sold put offsets part of the premium
• Defined risk and defined reward: you know your maximum loss upfront
• Tradeoff: you cap your profit at K2 (you give up gains below that level)

When to use it:

• You expect a moderate decline: not a crash
• Implied volatility is expensive: selling a put lowers your cost basis
• You want defined risk rather than unlimited downside protection

Compare to Bull Call Spread: Both are vertical debit spreads. Bull call spread profits from a rise; bear put spread profits from a decline. Both have defined max profit and max loss before entry.