Bear Put Spread


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Bear Put Spread

In options, a strategy in which one buys put options on a security and then sells the same number of put options on the same security with the same expiration month at a lower strike price. A bear put spread limits both the potential profit and the potential risk, but is most profitable if the security drops moderately in price.
References in periodicals archive ?
Tarun wants to use the bear call spread, while Rahul wants to use the bear put spread.
The cost in the bear put spread is Rs 2,250, which is the difference between the cost of the put option purchased (50x70=Rs 3,500) and the amount received from selling the put option (50x25=Rs 1,250).
Six strategies: covered calls, naked puts, bull put spreads, bull call spreads, bear call spreads and bear put spreads