Bull Put Spread

 What is Bull Put Spread?

In trader view, Bull Put Spread is considered a moderately bullish(Neutral to bullish view).

You think the stock reach ‘bottom’ and won’t drop lower. The best time to exercise BPS when there an uptrend or chopping sideway.

Profit potential is generally limited and depends on the share price remaining above the sell-put strike price at expiry.

How Bull Put Spread works?

Sell Put + Buy Put = Bull Put Spread

Strategy consists of selling put option while buying put option at a lower strike price to help define risk exposure.

While the long put (buy put) may help limit downside risk, losses can still occur and options strategies may not be suitable for investors.

Using vertical spread at same expiry date and both options must be Out-The-Money (OTM), Intrinsic.

Example

Spread width: $210 (sell put) - $200= $10

Total premiums: $0.93-$0.17 = $0.76

Max loss for 1 contract: ($10 - $0.76) x 100 shares = $924

Max gain for 1 contract:  $0.76 x 100 = $76




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