A bull put spread is also bullish but built for a credit: you sell a higher-strike put and buy a lower-strike put. You collect the premium up front an…
Bets on a rise or sideways move while collecting a credit.
Curve at expiration · dashed line = breakeven · gold ticks = strikes
A bull put spread is also bullish but built for a credit: you sell a higher-strike put and buy a lower-strike put. You collect the premium up front and want the underlying to stay above the short strike.
Use it when you expect a rise or simply no fall. Being a credit trade, time works in your favor: if nothing happens, the premium is yours.
With the example values already loaded in the calculator above, this strategy returns:
The numbers above come from the same engine as the calculator — change the fields to see your own scenario.
The max loss is the strike width minus the credit, and happens if the underlying drops below K2. The breakeven is the short strike minus the credit (K1 − premium).
With a credit trade you profit even if the underlying stays flat — it just has to stay above the short strike. A naked call needs a real rise to beat time decay.
At the short put strike minus the credit received. Above it you keep the max profit; below it the result erodes toward the max loss.