⚡ Bull Put Spread Playbook
→Sell at 45 DTE for optimal theta decay curve
→Close at 50% of max profit — don't be greedy
→Manage or roll at 21 DTE regardless of P&L
→Size to 1–5% of portfolio per trade
→Target short strikes near a 70–80% probability of expiring OTM
→Sell premium in high IV environments (IVR > 30) for better credit
What Is a Bull Put Spread?
A bull put spread is a defined-risk, credit-collecting strategy for a neutral-to-bullish outlook. You sell a put at a higher strike and simultaneously buy a further out-of-the-money put at a lower strike, collecting the difference in premium as an upfront credit. As long as the stock stays above the short strike through expiration, you keep the full credit — you don't need the stock to rally, just to avoid falling through your short strike.
Because both legs are options on the same underlying with the same expiration, the long put caps your maximum loss at the width of the strikes minus the credit received, which is what makes this a defined-risk alternative to selling a naked put.
Worked Example
Using the calculator's default inputs
SPY at $580, selling the $565 put for $4.50 and buying the $555 put for $2.10, both 45 DTE:
- Credit received: $240 per spread (($4.50 − $2.10) × 100)
- Strike width: $1,000 (($565 − $555) × 100)
- Max profit: $240 — kept in full if SPY closes at or above $565
- Max loss: $760 (strike width minus credit) if SPY closes at or below $555
- Breakeven at expiration: $562.60 ($565 short strike − $2.40 net credit)
Frequently Asked Questions
Do I need the stock to go up to profit from a bull put spread?
No — you profit as long as the stock stays above your short put strike at expiration, whether it rises, stays flat, or drifts down slightly.
Why buy the further OTM put instead of just selling the put alone?
The long put defines and caps your maximum loss. A naked short put carries substantially larger risk, down to the stock going to zero, while the spread trades some credit for a known, limited downside.
What does "50% of max profit" mean as a management rule?
Many credit-spread traders close the position once they've captured half the maximum credit, rather than holding to expiration for the last few dollars — it reduces the time the trade is exposed to a reversal.
How is return on capital (ROC) calculated for a credit spread?
ROC equals credit received divided by max loss (the capital at risk). It approximates the return on the margin the spread requires if held to expiration and max profit is achieved.