Sell a higher put + buy a lower put: you collect a net premium. Profits if the price holds or rises.
The structure
A Bull Put Spread collects a premium on a bullish view: sell a put near the price and buy a lower one for protection, same expiration. The net credit lands in your account on entry day, and you keep it if the stock holds above the sold strike.
When to use it
Use it when the view is “it will not fall below this level,” not “it will rise a lot.” It is a bet on holding, not on launching. It works better when implied volatility is high, since the premiums collected are fat, and below the sold level there is often a Put Wall acting as structural support.
Maximum profit and loss
Maximum profit is the net credit received, reached when both legs expire worthless. Maximum loss is the gap between the two strikes minus the credit, and it occurs if the stock closes below the lower strike.
Hypothetical example
A stock at $105: sell a put with a $100 strike for $2 and buy a put with a $95 strike for $0.80. Credit $1.20, maximum loss $3.80, breakeven $98.80. If the stock stays above 100, the premium is all profit.
Common mistake
Collecting small premiums against large, repeated risks: taking $0.30 against a risk of $4.70 needs a win rate above 94% just to break even. The streak breaks in the first stormy month. The ratio between credit and risk is the whole strategy.
Where to put the barrier
Below structural support that is likely to hold, such as a heavy Put Wall. The credit is payment for an obligation to buy the asset at a lower level, so ask before selling: would I accept owning it there? If the answer is no, you are selling an obligation you do not intend to honor comfortably.
Where to see it on the platform
The strategies tab in the calculator builds and charts it, and the selection guide suggests it when volatility is high and collecting a credit is likelier to pay than paying a debit.
The Gamma dashboard points to the walls, and the calculator works out the credit and the maximum loss.
