Skip to content
FinPins

FinPins

be finlightened

  • Home
    • FREE Personal Finance Course
    • Home
    • Promotions
    • Financial Literacy Quiz
    • About Us
    • Newsletter
  • Invest
    • Invest In Bitcoin?
    • How and Where to Start Investing?
    • Which is the Best Investment App?
    • How To Buy Your First Stock
    • Stock Basics
    • Stock Order Types
    • What is ETF?
    • ETF vs Stock
    • ETF vs Mutual Fund
    • Alternative Investing
    • Fractional Shares
    • Dividends Explained
    • Inflation vs Investing
    • M1: Create Portfolio
    • How To Invest $20?
  • Debt
    • Game of Loans: Is All Debt Bad?
    • Mortgage: Affording, Investing, Paying Off
    • My Loan Payoff Story
    • Is MBA Worth It?
  • Calculators
    • Student Loan Payoff Calculator
    • Mortgage Payoff Calculator
    • CAGR Calculator: Compound Annual Growth Rate
    • Reverse CAGR Calculator
  • BLOG
    • Web Stories
    • Stock Market Today
    • See NEWEST Posts
    • 19 Best Personal Finance Reddit Communities You Should Join
    • How to Build a Budget
    • 27 Best Personal Finance Books To Read
    • What is Metaverse? 18 Good Metaverse Stocks to Buy
    • DiversyFund vs Fundrise: Invest Affordable Amounts (as low as $500) in Real Estate
    • Cash Flow and Budgeting: 1 Easy and Powerful Budgeting Strategy
    • MFAANG – Tech Stocks
    • 9 Powerful Ideas on How To Make Money Online For Beginners
    • Invest In Apple Or Buy iPhone?
    • Retirement Strategy: 401(k) Mistakes to Avoid
    • Roth IRA vs 401(k): How to Choose
  • Stock Options
    • Stock Options: 5-Minute Guide
    • Call vs Put Options
    • Options Trading Levels
    • Options Greeks Cheat Sheet
    • Options Trading Quiz For Beginners
    • Straddle vs Strangle Options
    • Choose Your Options Strategy Wisely
    • Options Trading Cheat Sheet
  • Credit Cards
    • How to Use Credit Card Responsibly
    • How To Read A Credit Card Statement
    • FICO Credit Score Explained
    • Credit Card Mistakes To Avoid
    • 12 Best Credit Cards For Millennials
    • 10 Best Credit Cards For Ad Spend
    • 12 Best Credit Cards For Farmers
    • 11 Best Credit Cards For Digital Nomads
    • 10 Best Credit Repair Books
    • 9 Best Business Credit Cards for Construction Companies
    • 8 Best Credit Cards for Nurses
    • 4 Best Credit Cards For Nannies
    • 9 Best Credit Cards for Wedding Expenses
    • 10 Best Credit Cards For Consultants
    • 6 Best Credit Cards for Traveling Consultants
    • How Do Business Credit Cards Work?
    • 8 Best Credit Cards For Teachers
    • 8 Best Credit Cards For Golf Lovers
  • Tech
    • How To Use ChatGPT
    • ChatGPT Examples
    • How To Make Money With ChatGPT
    • 12 Best AI Story Generators
    • 12 Best AI Video Generators From Text
    • 8 Best AI Video Enhancers And Editors
    • 20 Best AI Art Generators From Text
    • 40 Best AI Writing Tools
    • Digital Tools For Business
  • Toggle search form
BEAR PUT SPREAD VS BULL PUT SPREAD

Bear Put Spread vs Bull Put Spread: Easy 5 Point Comparison

Posted on March 30, 2022August 28, 2022 By Sumeet Sinha, MBA

With the combination of two put options with the same expiration date, we can create Put Spreads. We can do so in both directions, whether we feel bullish or bearish. Let’s take a look at the details and compare Bear Put Spread vs Bull Put Spread.

Page Contents

  • Bear Put Spread
    • Is Bear Put Spread a Net Debit or Net Credit spread?
    • What is the Maximum Profit in a Bear Put Spread?
    • What is the Maximum Loss in a Bear Put Spread?
    • What is the Breakeven Point of a Bear Put Spread?
    • Bear Put Spread – Profit and Loss Graph
  • Bull Put Spread
    • Is Bull Put Spread a Net Debit or Net Credit spread?
    • What is the Maximum Profit in a Bull Put Spread?
    • What is the Maximum Loss in a Bull Put Spread?
    • What is the Breakeven Point of a Bull Put Spread?
    • Bull Put Spread – Zones of Profit and Loss
  • Bear Put Spread vs Bull Put Spread: Comparison

Bear Put Spread

A bear put spread is a vertical options spread created by buying a put option (long put) at a higher strike price, and selling a put option (short put) at a lower strike price. Both the put options – long and short – must have the same expiration date. In the example below, we are buying a $150 Strike Price put and selling a $130 Strike Price put. Both have the same expiration date of January 21, 2022, and the strike spread is $20 (i.e. $150 – $130).

bear put spread

Is Bear Put Spread a Net Debit or Net Credit spread?

A Bear Put Spread is a Net Debit spread.

Since we sell a lower strike put (which is cheaper) and buy a higher strike put (which is more expensive), on a net basis pay money to create a bear put spread. In the example shown above, we can sell the $130 strike put and collect $4.75 per share (or $475 for the contract of 100 shares), and we pay $12.21 per share (or $1,221 for the contract of 100 shares) for buying the $150 strike put.

On a net basis, we’ll pay $12.21 – $4.75 = $7.46 to create this bear put spread, hence it is a net debit spread.

Net debit = $7.46 per share or $746 for the spread.

What is the Maximum Profit in a Bear Put Spread?

The maximum profit in a bear put spread = Strike Spread – |Net Debit|

In this case, maximum profit = $20 – 7.46 = $12.54 per share, or $1,254 for the spread.

What is the Maximum Loss in a Bear Put Spread?

The maximum loss in a bear put spread = Net Debit

In this case, maximum loss = $7.46 per share, or $746 for the spread.

What is the Breakeven Point of a Bear Put Spread?

The breakeven point of a bear put spread = Higher Strike Price (i.e. of Long Put) – |Net Debit|

In this case, breakeven point = $150 – $7.46 = $142.54.

Bear Put Spread – Profit and Loss Graph

View on Tableau

Both the maximum profit and maximum loss are observed between the higher and lower strike prices of the bear put spread. The maximum profit is capped at the point when the stock price is at the lower strike price. The maximum loss is contained at the point when the stock price rises to the higher strike price. There is one breakeven point and (mostly) it lies in between the two strike prices.

Bull Put Spread

A bull put spread is a vertical spread created by buying a put option (long put) at a lower strike price, and selling a put option (short put) at a higher strike price. Both the put options – long and short – must have the same expiration date. In the example below, we are buying a $130 Strike Price put and selling a $150 Strike Price put. Both have the same expiration date of January 21, 2022, and the strike spread is $20 (i.e. $150 – $130).

bull put spread

Is Bull Put Spread a Net Debit or Net Credit spread?

A Bull Put Spread is a Net Credit spread.

Since we buy a lower strike put (which is cheaper) and sell a higher strike put (which is more expensive), on a net basis we collect money to create a bull put spread. In the example shown above, we can buy the $130 strike put for $4.75 per share (or $475 for the contract of 100 shares), and we can collect $12.21 per share (or $1,221 for the contract of 100 shares) for selling the $150 strike put.

On a net basis, we’ll collect $12.21 – $4.75 = $7.46 to create this bull put spread, hence it is a net credit spread.

Net credit = $7.46 per share or $746 for the spread.

What is the Maximum Profit in a Bull Put Spread?

The maximum profit in a bull put spread = Net Credit

In this case, maximum profit = $7.46 per share, or $746 for the spread.

What is the Maximum Loss in a Bull Put Spread?

The maximum loss in a bull put spread = Strike Spread – Net Credit

In this case, maximum loss = $20 – $7.46 = $12.54 per share, or $1,254 for the spread.

What is the Breakeven Point of a Bull Put Spread?

The breakeven point of a bull put spread = Higher Strike Price (i.e. of Short Put) – |Net Credit|

In this case, breakeven point = $150 – $7.46 = $142.54.

Bull Put Spread – Zones of Profit and Loss

bull put spread profit and loss
View on Tableau

Both the maximum profit and maximum loss are observed between the higher and lower strike prices of the bull put spread. The maximum profit is capped at the point when the stock price reaches the higher strike price. The maximum loss is contained at the point when the stock price falls to the lower strike price. There is one breakeven point and (mostly) it lies in between the two strike prices.

Bear Put Spread vs Bull Put Spread: Comparison

We will compare the bear put spread vs bull put spread on the 5 criteria:

  • the construction of the spread, i.e. how you can create the spread
  • net debit or net credit, i.e. whether we have to pay to buy the option contract
  • max profit possible in the trade
  • max loss possible in the trade
  • breakeven point
bear put spread vs bull put spread comparison

For more on Stock Options, check out StartOptions.com

Read also: Straddle vs Strangle Options, Call vs Put Options


sumeet sinha as seen on washington post us news yahoo finance

Fresh from the Blog

  • MAKE MONEY WITH CHATGPT
    How To Make Money With ChatGPT: 5 Easy Ideas For Beginners
  • best digital tools for your business
    Digital Tools For Business: Top 4 Essential Tools You Need in 2023
  • CHATGPT EXAMPLES QUESTIONS ANSWERED BY CHATGPT
    ChatGPT Examples: 22 Interesting Questions Answered By ChatGPT
  • HOW TO USE CHATGPT BY OPENAI
    How To Use ChatGPT: I Asked This Powerful AI Tool 8 Questions
  • BEST ALTERNATIVE INVESTMENT BLOGS
    11 Best Alternative Investment Blogs To Follow
  • CREDIT CARDS FOR AD SPEND
    10 Best Credit Cards For Ad Spend: Including No Annual Fee Cards
  • HOW TO READ A CREDIT CARD STATEMENT
    How To Read A Credit Card Statement: Avoid 1 Expensive Mistake
  • FICO CREDIT SCORE
    FICO Credit Score Explained: 5 Critical Components
  • BEST CREDIT CARDS FOR MILLENNIALS
    12 Best Credit Cards For Millennials: $0 Annual Fee Cards Included
  • COMMON CREDIT CARD MISTAKES TO AVOID FOR BEGINNERS
    8 Common Credit Card Mistakes To Avoid For Beginners
  • BEST CREDIT CARDS FOR DIGITAL NOMADS
    11 Best Credit Cards For Digital Nomads: Including $0 Annual Fee Cards
  • best credit cards for farmers
    12 Best Credit Cards For Farmers: Including Zero Annual Fee Cards

Read more:

Stocks, ETFs, Mutual Funds, Bitcoins
Alternative Investing, Dividends, Stock Options, Credit Cards

Home | BLOG | WebStories

Useful Tools: Student Loan Payoff Calculator | Mortgage Payoff Calculator

Useful Tools: CAGR Calculator | Reverse CAGR Calculator

EARLY LOAN PAYOFF CALCULATOR, LOAN CALCULATOR APP BY SUMEET SINHA

PayItOff – Loan Calculator

https://apps.apple.com/lu/app/payitoff-loan-calculator/id1625456884

Page Contents

  • Bear Put Spread
    • Is Bear Put Spread a Net Debit or Net Credit spread?
    • What is the Maximum Profit in a Bear Put Spread?
    • What is the Maximum Loss in a Bear Put Spread?
    • What is the Breakeven Point of a Bear Put Spread?
    • Bear Put Spread – Profit and Loss Graph
  • Bull Put Spread
    • Is Bull Put Spread a Net Debit or Net Credit spread?
    • What is the Maximum Profit in a Bull Put Spread?
    • What is the Maximum Loss in a Bull Put Spread?
    • What is the Breakeven Point of a Bull Put Spread?
    • Bull Put Spread – Zones of Profit and Loss
  • Bear Put Spread vs Bull Put Spread: Comparison
  • Fresh from the Blog
    • PayItOff – Loan Calculator
Stock Options

Post navigation

Previous Post: Choose Your Options Strategy Wisely: Comprehensive List of 25+ Strategies
Next Post: Bear Call Spread vs Bull Call Spread: Easy 5 Point Comparison

Related Posts

  • STOCK OPTIONS GREEKS CHEAT SHEET
    Options Greeks Cheat Sheet: 4 Greeks – Delta, Gamma, Theta, Vega Stock Options
  • OPTIONS TRADING STRATEGY
    Choose Your Options Strategy Wisely: Comprehensive List of 25+ Strategies Stock Options
  • Options Trading Quiz
    Options Trading Quiz For Beginners [2023] Stock Options
  • HOW TO BUY A LONG CALL OPTION
    How To Buy A Long Call Option on 100 Shares: Step-by-Step Guide Stock Options
  • STOCK OPTIONS TRADING
    Stock Options Trading For Beginners: Easy 5-Minute Guide Stock Options
  • OPTIONS TRADING CHEAT SHEET
    Options Trading Cheat Sheet – Free PDF Download [2023] Stock Options

PayItOff – Loan Payoff Calculator

Recent Posts

  • Stock Options Trading For Beginners: Easy 5-Minute Guide
  • How To Make Money With ChatGPT: 5 Easy Ideas For Beginners
  • Digital Tools For Business: Top 4 Essential Tools You Need in 2023
  • ChatGPT Examples: 22 Interesting Questions Answered By ChatGPT
  • How To Use ChatGPT: I Asked This Powerful AI Tool 8 Questions
  • 11 Best Alternative Investment Blogs To Follow
  • 10 Best Credit Cards For Ad Spend: Including No Annual Fee Cards
  • How To Read A Credit Card Statement: Avoid 1 Expensive Mistake
  • FICO Credit Score Explained: 5 Critical Components
  • 12 Best Credit Cards For Millennials: $0 Annual Fee Cards Included
  • HOW GOOGLE MAKES MONEY
    How Google Makes Money: 6 Powerful Revenue Streams General
  • BEST ALTERNATIVE INVESTMENT BLOGS
    11 Best Alternative Investment Blogs To Follow Invest
  • when will the stock market crash
    When Will The Stock Market Crash? Plus, List of 14 Previous Painful Bear Markets in the US Risk Management
  • Best AI Story Generators
    12 Best AI Story Generators: Write Stories, Blogs, and Novels With AI General
  • REDDIT PERSONAL FINANCE TIPS
    19 Best Reddit Personal Finance Tips on r/PersonalFinance Threads General
  • BUYING A NEW OR USED CAR AMID INFLATION
    7 Smart Tips On Buying A New Or Used Car Amid Inflation General
  • 401k vs roth ira vs traditional ira
    How to Decide – 401(k), Roth IRA, or Traditional IRA Invest
  • HOW TO START INVESTING AS A COLLEGE STUDENT
    Invest $20: How to Start Investing As A College Student Even If You Are Broke! Invest
  • HOW TO BUY LAND IN THE METAVERSE
    How To Buy Land In The METAVERSE In 5 Easy Steps General
  • BEST AI WRITING TOOLS
    40 Best AI Writing Tools and Pricing Plans [2023] General

Disclosure & Disclaimer

We participate in Affiliate Programs (Amazon and others). We may earn a commission if you use links to open an account or make an investment or purchase.


All content on the website is for information purposes only, not investment advice. Please do your own research and analysis before investing.

https://www.fiverr.com/
en English
en Englishfr Françaisde Deutschhi हिन्दीit Italiano

Sitemap

Recent Posts

  • How To Make Money With ChatGPT: 5 Easy Ideas For Beginners
  • Digital Tools For Business: Top 4 Essential Tools You Need in 2023
  • ChatGPT Examples: 22 Interesting Questions Answered By ChatGPT
  • How To Use ChatGPT: I Asked This Powerful AI Tool 8 Questions
  • 11 Best Alternative Investment Blogs To Follow
  • 10 Best Credit Cards For Ad Spend: Including No Annual Fee Cards
  • How To Read A Credit Card Statement: Avoid 1 Expensive Mistake
  • FICO Credit Score Explained: 5 Critical Components
  • 12 Best Credit Cards For Millennials: $0 Annual Fee Cards Included
  • 8 Common Credit Card Mistakes To Avoid For Beginners

Navigation

  • Home
  • About Us
  • Privacy Policy
  • Do Not Sell My Data
  • User Login
  • User Dashboard
  • Support
  • Calculators
  • BLOG
  • Financial Literacy Quiz
  • Web Stories

Categories

  • Cash Flow
  • Credit Cards
  • Debt Management
  • General
  • Invest
  • Mini Blogs
  • Risk Management
  • Stock Market Today
  • Stock Options
  • Tech

Reach Out To Us

contact@finlightened.com

Copyright © 2023 FinPins.com |

Powered by PressBook News Dark theme