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Bear Put Spread Calculator

Bear put spread profit or loss equals maximum long put strike minus stock price or zero, minus maximum short put strike minus stock price or zero, minus net debit, times 100 shares times number of contracts.

Expiration scenarios

Solution

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Educational estimate only, not financial advice. Results exclude commissions, taxes, slippage, dividends, assignment risk, margin, and broker-specific rules. Verify before trading options.

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Bear Put Spread Formula

Break-even equals the long put strike minus net debit. Maximum profit is the spread width minus net debit, and maximum loss is the net debit paid.

Worked Examples

Load these examples to compare capped downside profit, partial wins, and full-debit losses for bearish put spreads.

DOWNSIDE TARGET

How do you estimate a capped bearish spread?

A trader buys 1 $100 put for $6 and sells 1 $90 put for $2 before a weak guidance event. The stock finishes at $88.

  • Net debit = $6.00 - $2.00 = $4.00 per share.
  • Spread width = $100 - $90 = $10.00.
  • At $88, the spread is capped at $10.00 per share.
  • Profit = ($10.00 - $4.00) x 100 = $600.
  • Break-even = $100 - $4.00 = $96.00.

Result: the bear put spread earns $600.00, which is its maximum profit.

The short put caps the downside payoff once the stock falls below the short strike.

PARTIAL DECLINE

What if the stock falls but stays above the short put?

A trader buys 1 $220 put for $10.50 and sells 1 $205 put for $4. The stock finishes at $212.

  • Net debit = $10.50 - $4.00 = $6.50 per share.
  • Spread value at expiration = max($220 - $212, 0) - max($205 - $212, 0) = $8.00.
  • Profit = ($8.00 - $6.50) x 100 = $150.
  • Break-even = $220 - $6.50 = $213.50.

Result: the spread earns $150.00 because the stock finishes below break-even.

This is a partial win, not max profit, because the stock is still above the short put strike.

NO SELLOFF

What if the stock rallies instead?

A trader buys 1 $70 put for $4.80 and sells 1 $60 put for $1.60. The stock finishes at $75.

  • Net debit = $4.80 - $1.60 = $3.20 per share.
  • Both puts expire out of the money at $75.
  • Spread value at expiration = $0.
  • Loss = $3.20 x 100 = $320.

Result: the bear put spread loses the full $320.00 net debit.

A bear put spread has defined risk, but the debit is still fully at risk if the bearish move does not happen.

How It Works

A bear put spread combines a long put at a higher strike with a short put at a lower strike in the same expiration. The short put premium reduces the cost of the bearish trade, but it also caps the payoff once the stock falls below the short put strike. At expiration, profit equals the long put value minus the short put obligation, minus the net debit paid.

Example Problem

You buy 1 $100 put for $6 and sell 1 $90 put for $2. The stock finishes at $88 at expiration. What are the profit, break-even price, maximum profit, and maximum loss?

  1. Identify the inputs: long put strike = $100, long put premium = $6, short put strike = $90, short put premium = $2, stock price = $88, and contracts = 1.
  2. Compute the net debit per share: $6 - $2 = $4.
  3. Compute the spread value at expiration: max($100 - $88, 0) - max($90 - $88, 0) = $12 - $2 = $10 per share.
  4. Subtract the net debit: ($10 - $4) x 100 x 1 = $600 profit.
  5. Break-even equals long put strike minus net debit: $100 - $4 = $96.
  6. Maximum profit equals spread width minus net debit: ($10 - $4) x 100 = $600, and maximum loss equals the $400 net debit.

A bear put spread is a defined-risk bearish trade. It benefits from downside through the short strike, then the payoff is capped.

Key Concepts

The long put creates bearish exposure while the short put helps finance the trade. Net debit is the amount paid after the short put premium is credited. Break-even is the higher strike minus the net debit. Maximum loss is the net debit paid, and maximum profit is the distance between strikes minus that debit.

Applications

  • Planning a lower-cost bearish trade with defined risk.
  • Comparing a put spread against buying a single put.
  • Estimating whether a downside target is low enough to justify the capped payoff.
  • Sizing contracts based on maximum loss and return on risk.

Common Mistakes

  • Forgetting that the long put strike must be above the short put strike for this debit-spread setup.
  • Using the short strike as break-even instead of subtracting net debit from the long strike.
  • Entering a credit spread by mistake when the calculator expects a net debit bear put spread.
  • Using expiration payoff as if it were today's option value before expiration.

Frequently Asked Questions

What is a bear put spread?

A bear put spread is a bearish vertical spread made by buying a higher-strike put and selling a lower-strike put with the same expiration. The trade has limited risk and limited profit potential.

How do I calculate bear put spread break-even?

Break-even equals the long put strike minus the net debit paid per share. For example, a $100/$90 put spread opened for a $4 debit breaks even at $96.

What is the maximum profit on a bear put spread?

Maximum profit equals the spread width minus the net debit, multiplied by 100 shares and the number of contracts. It occurs when the stock finishes at or below the short put strike.

What is the maximum loss on a bear put spread?

Maximum loss is the net debit paid for the spread. It occurs when the stock finishes at or above the long put strike at expiration.

Why sell the lower-strike put?

Selling the lower-strike put reduces the entry cost, which lowers maximum loss and can improve return on risk. The tradeoff is that profit is capped below the short strike.

Does this calculator include commissions or early assignment?

No. The calculator models expiration payoff only. Commissions, fees, early assignment, exercise decisions, and changing implied volatility before expiration are not included.

Reference:

Options Industry Council, Bear Put Spread strategy description and expiration payoff definitions. https://www.optionseducation.org/

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