Bear Put Spreads for Beginners - Options Learning Center
Welcome to the Options Learning Center, where we will explore a wide range of topics and ideas related to options trading. This video will explain bear put spreads!
The bear put spread is a long put option strategy where you expect the underlying security to decrease in value. The bear put option strategy involves buying a put option around the price of the underlying security and selling a put option at a lower strike price.
Maximum loss is the difference between the premium paid for the long put and the premium received for the short put (Net Debit), which will occur if the underlying security price is above the higher strike price at expiration. Maximum profit is the difference in strike values minus the Net Debit. The bear put strategy succeeds if the security price is below breakeven (higher strike - Net Debit). Maximum profit is achieved if the security price is below the lower strike price at expiration.
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