Bull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem
Bull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem ..
BULL PUT SPREAD Vs BULL PUT SPREAD - When & How to use ?
BULL PUT SPREAD
BULL PUT SPREAD
Market View
Bullish
Bullish
When to use?
Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall.
Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall.
Action
Buy OTM Put Option, Sell ITM Put Option
Buy OTM Put Option, Sell ITM Put Option
Breakeven Point
Strike price of short put - net premium paid
Strike price of short put - net premium paid
BULL PUT SPREAD Vs BULL PUT SPREAD - Risk & Reward
BULL PUT SPREAD
BULL PUT SPREAD
Maximum Profit Scenario
Max Profit = Net Premium Received
Max Profit = Net Premium Received
Maximum Loss Scenario
Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received
Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received
Risk
Limited
Limited
Reward
Limited
Limited
BULL PUT SPREAD Vs BULL PUT SPREAD - Strategy Pros & Cons
BULL PUT SPREAD
BULL PUT SPREAD
Similar Strategies
Bull Call Spread, Bear Put Spread, Collar
Bull Call Spread, Bear Put Spread, Collar
Disadvantage
• Limited profit potential. • In loss situations, time decay may go against you.
• Limited profit potential. • In loss situations, time decay may go against you.
Advantages
• Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk.
• Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk.