Bear Put Spread

Description

Buying a higher-strike Put and selling a lower-strike Put.

Trading Logic

Moderately bearish. Reduces cost by selling a lower-strike Put.

Practical Example

Stock at $100. Buy $100P ($5), sell $90P ($2). Net debit: $3.

P/L Curve

Chart Description
  • X-Axis: Stock price at expiration
  • Y-Axis: Expected P/L ($)
  • Green area: Profit; Red area: Loss