Bull Put Spread

A defined-risk bullish credit spread — keep the premium if it holds up · payoff at expiration

Worked example

Sell the $100.00 put and buy the $90.00 put for a net $400.00 credit — capital required $600.00. Max profit $400.00, max loss -$600.00, breakeven $96.00.

At expiration: if the stock is at $110.00, the position shows a net P&L of $400.00; if the stock is at $80.00, the position shows a net P&L of -$600.00.

When to use

You expect the stock to hold above the higher strike — you profit from time passing, not from a big move.
You want to collect premium with a known, capped maximum loss (unlike a naked short put).
You prefer a high-probability, limited-reward position over paying a debit.

Common pitfalls

Your profit is capped at the net credit — even a strong rally earns no more.
The max loss (width minus credit) is larger than the credit collected, and ties up margin until expiration.
A drop below the lower strike realizes the full loss; manage the spread before assignment risk grows.