# What is a Bull Put Spread?   A bull put spread is a vertical spread created by buying a put option (long put) at a lower strike price, and selling a put option (short put) at a higher strike price. Both the put options – long and short – must have the same expiration date. In example below, we are buying a \$130 Strike Price put and selling a \$150 Strike Price put. Both have the same expiration date of January 21, 2022, and the strike spread is \$20 (i.e. \$150 – \$130).

### Is Bull Put Spread a Net Debit or Net Credit spread?

Since we buy a lower strike put (which is cheaper) and sell a higher strike put (which is more expensive), on a net basis we collect money to create a bull put spread. In the example shown above, we can buy the \$130 strike put for \$4.75 per share (or \$475 for the contract of 100 shares), and we can collect \$12.21 per share (or \$1,221 for the contract of 100 shares) for selling the \$150 strike put.  On a net basis, we’ll collect \$12.21 – \$4.75 = \$7.46 to create this bull put spread, hence it is a net credit spread.

Net credit = \$7.46 per share, or \$746 for the spread.

### What is the Maximum Profit in a Bull Put Spread?

The maximum profit in a bull put spread = Net Credit  In this case, maximum profit = \$7.46 per share, or \$746 for the spread.

### What is the Maximum Loss in a Bull Put Spread?

The maximum loss in a bull put spread = Strike Spread – Net Credit

In this case, maximum loss = \$20 – \$7.46 = \$12.54 per share, or \$1,254 for the spread.

### What is the Breakeven Point of a Bull Put Spread?

The breakeven point of a bull put spread = Higher Strike Price (i.e. of Short Put) – |Net Credit|

In this case, breakeven point = \$150 – \$7.46 = \$142.54.

### Bull Put Spread – Zones of Profit and Loss

Both the maximum profit and maximum loss are observed between the higher and lower strike prices of the bull put spread. The maximum profit is capped at the point when the stock price reaches the higher strike price. The maximum loss is contained at the point when the stock price falls to the lower strike price. There is one breakeven point and (mostly) it lies in between the two strike prices.

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