Bear Put Spread Calculator

How to calculate a bear put spread

A bear put spread buys a put and sells a lower strike put with the same expiration. The sold put pays for part of the trade, and in exchange the profit stops growing below the lower strike.

It suits a view that a stock will fall to a specific level and not much further. If you think the stock could fall far past that level, the cap matters and a plain long put keeps that gain.

Net debit = higher put premium − lower put premium. Max profit = (strike width − net debit) × 100. Max loss = net debit × 100. Break-even = higher strike − net debit.

Worked example

With a stock at $900, you buy the $900 put for $15.00 and sell the $880 put for $8.00. The debit is $7.00, or $700 a spread.

The maximum profit is ($20 − $7) × 100, or $1,300, at $880 or below, which is about 186% of the amount at risk. The break-even is $893.

What the result does not account for

• Early assignment on the short put when it is deep in the money.
• The two bid-ask spreads you cross to enter and again to exit before expiration.
• Dividends and changes in implied volatility in the time-decay view.

Frequently asked questions