Bear Put Spread Calculator
Buy a put and sell a lower-strike put with the same expiry, for a net debit. You profit if the stock falls, with your cost and your profit both capped.
Stock
Put you're buying
Put you're selling
Calendar days to expiry: 30
Manual settings
Left blank, each is worked out from that put's premium (bought put left, sold put right).
Has only a small effect. Leave at 4% if unsure.
Example trade shown. Replace with your own numbers.
Profit / loss by stock price
Profit / loss over time
Values before expiry are estimates using Black-Scholes and each put's implied volatility. Chances use the bought put's volatility. Assumes both puts are held to each date shown and ignores closing fees, dividends and early assignment. For educational purposes only.
What is a Bear Put Spread?
A bear put spread is a way to profit from a stock falling, while keeping your cost and risk small. You buy a put option and, at the same time, sell a put with a lower strike price and the same expiry date. The put you sell brings in some money, which lowers the cost of the put you buy.
You pay for the spread up front (the "net cost"). That cost is the most you can lose. Your profit is capped too: the most you can make is the gap between the two strike prices, minus what you paid.
How to use this calculator
1. Enter the stock's current price. Adding the ticker symbol is optional.
2. Enter the put you're buying: its strike price (the higher one) and its premium per share.
3. Enter the put you're selling: its strike price (the lower one) and its premium per share.
4. Set the expiry date, or type the number of days to expiry.
5. Enter how many spreads you're trading and any fees per spread.
The calculator updates as you type. You'll see:
- Your net cost, maximum profit, maximum loss and break-even price.
- Your chance of making a profit, of making the maximum profit, and of taking the maximum loss.
- A chart of your profit or loss at different stock prices, today, at two dates in between, and at expiry. Hover over the chart (or tap it on a phone) to read exact values.
- A table of profit or loss by stock price and date, shown in dollars or as a percentage of your cost.
You can find the premiums in your broker's option chain. Use the mid-price between the bid and the ask for a realistic figure. Under "Manual settings" you can enter the implied volatility yourself, change the interest rate, or set the price range shown in the chart and table.
When is a Bear Put Spread a good choice?
- You expect the stock to fall, but only by a moderate amount, roughly down to your lower strike.
- You want a defined, limited risk. You know your worst case before you place the trade.
- Buying a put on its own feels too expensive. Selling the lower put cuts your cost, often by a third or more.
- Implied volatility is low to moderate. You're paying a net premium, so buying when options are relatively cheap helps.
- You have enough time for the move to happen. Many traders choose expiries 30 to 60 days out.
When might it not suit?
- You expect a very large drop. Your profit stops growing below the lower strike, so a single put may suit you better.
- You expect the stock to stay flat or rise. Time decay works against you, and above the higher strike you lose your full cost.
- Implied volatility is very high. Option prices are inflated, and selling premium (for example with a bear call spread) is often the better way to take a bearish view.
Things to keep in mind
- Above the higher strike at expiry, both puts expire worthless and you lose what you paid.
- Between the two strikes, the result depends on where the stock finishes. Check the break-even price on the calculator.
- Below the lower strike, you make your maximum profit. Many traders close the spread early once most of the profit is reached, rather than waiting for expiry.
- The put you sell can be assigned early, especially if it's well below the stock price near expiry or around a dividend. Your bought put still protects you, but it's worth knowing.
This calculator gives estimates for educational purposes only. It isn't financial advice. Option prices before expiry are modelled, and real prices will differ.