Bear Put Spread: How It Works, Formulas, and Examples
The bear put spread is a two-leg options strategy used when you expect a stock to decline moderately. It offers defined risk and defined reward — you cap both your potential loss and your potential gain compared to buying a naked put.
In this guide
1. What Is a Bear Put Spread?
A bear put spread involves buying a put at a higher strike price and simultaneously selling a put at a lower strike price, both with the same expiration date. The sold put generates premium that offsets the cost of the put you bought.
The result is a net debit — you pay less than you would for a naked long put, but you also cap your maximum profit at the lower strike. If the stock falls to or below the lower strike, you capture the full spread value.
The bear put spread is also called a put debit spread or long put vertical. It is the bearish equivalent of the bull call spread — same structure, opposite direction.
2. Maximum Profit Formula
Maximum profit is achieved when the stock closes at or below the lower strike at expiration. Both puts are in the money, and you capture the full spread width minus what you paid.
Max Profit = (Higher Strike − Lower Strike − Net Debit Paid) × 100
3. Maximum Loss Formula
Maximum loss occurs when the stock closes at or above the higher strike at expiration. Both puts expire worthless and you lose the net debit paid to enter the trade.
Max Loss = Net Debit Paid × 100
4. Breakeven Calculation
Breakeven = Higher Strike − Net Debit Paid
The stock must fall below the breakeven for the trade to show a profit. Between the higher strike and the breakeven, the position shows a partial loss.
5. Worked Example
QQQ is trading at $480. You expect it to fall to $460 before expiration.
Trade Setup
- Buy 1 QQQ $475 put at $6.00
- Sell 1 QQQ $460 put at $2.50
- Net debit: $6.00 − $2.50 = $3.50 per share
- Spread width: $475 − $460 = $15
Max Profit: ($15 − $3.50) × 100 = $1,150
Max Loss: $3.50 × 100 = $350
Breakeven: $475 − $3.50 = $471.50
QQQ needs to fall below $471.50 for the trade to be profitable. If it falls to $460 or below, you collect the full $1,150. The reward-to-risk ratio is $1,150 / $350 = 3.3:1. You are risking $350 to potentially make $1,150.
6. When to Use a Bear Put Spread
- •You are moderately bearish. You expect the stock to decline to a specific level — not collapse. Place the short put at your target.
- •You want to reduce cost vs a naked put. The sold put cuts your premium outlay significantly, lowering breakeven and risk.
- •High implied volatility. Elevated IV makes options expensive. Selling the lower put offsets some of the inflated cost of the put you bought.
7. Free Bear Put Spread Calculator
Enter your two strikes and premiums to see max profit, max loss, breakeven, and the full P&L chart for any bear put spread. No signup required.
Open Bear Put Spread Calculator