---
description: "A bullish vertical spread selling a higher-strike OTM put at K2 and buying a lower-strike OTM put at K1 for a net credit, profiting if the stock stays above K2."
tags: [options, income, bullish, vertical-spread]
---

# Bull Put Spread

**Section**: 2.7 | **Asset Class**: Options | **Type**: Income

## Overview
The bull put spread is a vertical spread consisting of a long position in an OTM put option with strike K1, and a short position in another OTM put option with a higher strike K2 (K2 > K1). This is a net credit trade. The trader's outlook is bullish. This is an income strategy.

## Construction
- Buy 1 put option at strike K1 (lower OTM), same expiry
- Sell 1 put option at strike K2 (higher OTM, K2 > K1)

Net credit: C = premium received for K2 put - premium paid for K1 put

## Payoff Profile
f_T = (K1 - S_T)+ - (K2 - S_T)+ + C

- Breakeven: S* = K2 - C
- Max profit: P_max = C  (if S_T >= K2 at expiry; both puts expire worthless)
- Max loss: L_max = K2 - K1 - C  (if S_T <= K1 at expiry)

## Key Conditions / Signals
- Bullish to neutral outlook; expects stock to remain above K2 by expiry
- Prefer when implied volatility is elevated (larger credit received)
- Income generation with defined downside risk

## Notes
The bull put spread is a credit spread. Maximum profit is limited to the net credit received. Maximum loss is the spread width minus the credit. The long put at K1 provides downside protection relative to a naked short put.