Vertical spreads
What is a Bear Put Spread (Debit Put Spread) and when is it preferred over a single long put?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A bear put spread involves buying a put at a higher strike and selling a put at a lower strike with the same expiration, lowering the net cost compared to a single long put and defining both maximum profit and loss, often preferred when a trader expects only a moderate decline.
How it works
This is typically chosen over a standalone long put when a trader wants to reduce upfront premium cost and is willing to cap potential profit in exchange for a lower breakeven requirement.
An example
Buying a $50 put for $3 and selling a $45 put for $1 creates a $2 net debit spread with maximum profit of $3 if the stock closes at or below $45.
Risk & limitations
OIC notes this strategy sacrifices profit potential below the short put strike in exchange for the reduced upfront cost compared to a single long put.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.