Important notice
The information on this web site is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current. Trading in stocks and options involves risk. You can lose money. You should always seek professional advice from your stock broker. We are not stockbrokers and do not make recommendations to buy or sell any stock or option. We provide educational information for your evaluation.

Return to Option Strategies

Bull-Put Credit Spread is a strategy for the investor to receive a profit that is net credit by the difference in writing a Put Option and buying a Put Option.

We should buy a Bull-Put Credit on bullish stocks.

Example: XYZ stock is trading at 52.50

Write (Sell) April 55.00 Put for 3.79 and then Buy April 50 Put for 1.19

The objective is for XYZ stock to rise above 55.00 at expiration date.

We would keep the premium (Credit Spread) for writing the Put 3.79 minus the cost of buying the Put 1.19, a profit of 2.60.

The maximum risk is if  XYZ stock drops to 50.00 by expiration date.

Example: XYZ stock drops to 50.00 at expiration, XYZ stock would be put to us at 55.00 a 5.00 loss, however we did received a profit of 2.60 from writing the 55.00 Put and buying the 50.00 Put, minimizing our loss to 2.40 ( 5.00 – 2.60 = 2.40).

The above numbers for the price of the Options can fluctuate based on the Stock and Options volatility and timing, (Timing: execution of the Options in the morning versus in the afternoon of the expiration date).    

No consideration was given to the cost of brokers fees or margin cost.