When Should You Use This Strategy?
Mildly bullish and want to collect premium
Who Benefits Most?
Income-focused traders
Position Setup
The Bull Put Spread consists of the following legs:
- Sell 1105 strike put at $8 premium
- Buy 195 strike put at $3 premium
How Profit and Loss Work
Maximum Profit: Limited: Net premium received
Maximum Loss: Limited: (Short strike − Long strike) − Net premium received
Break-even Points: Short strike − Net premium received
Timing & Time Horizon
30–45 days
Most traders enter this strategy 30–60 days before their expected move, allowing enough time for the position to develop while avoiding excessive time decay on shorter-dated options.
Capital Requirements
Moderate margin requirement
How to Manage the Position
Close at 50% max profit for safety
- Monitor the position daily, especially as it approaches profitability
- Set clear profit targets and exit rules before entering
- Consider closing early to lock in gains rather than waiting for max profit
- Be prepared to cut losses if the thesis is wrong
Key Risks & What to Watch
- Margin call if stock drops sharply
- Assignment forces stock purchase
Model Before You Trade
Every strategy performs differently based on entry price, strike selection, and premium levels. Use the interactive Bull Put Spread calculator to model the payoff with your expected entry, strikes, and premiums before committing capital.
Educational information only. This guide explains how the strategy works mathematically and typically behaves. It is not investment advice, and past performance does not guarantee future results. Options trading involves significant risk, including the potential loss of premium paid. Paper trade or use small positions while learning.