Bull Put Spread TUTORIAL [Vertical Spread Options Strategy]

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The bull put spread is a bullish options strategy consisting of two separate put option transactions. One put option is sold and another put option at a lower strike price is purchased (same expiration cycle).

The bull put spread is one of the four vertical spread strategies.

The strategy has many other names that options traders use, including the short put spread, put credit spread, and simply selling a put spread.

In this video, we’ll cover:

– Bull put spread explained (setup, explanation, max profit potential, max loss potential, breakevens)

– Historical trade examples so you can see exactly how the bull put vertical spread strategy has performed in the past in various scenarios.

– A demonstration of setting up a short put spread on the tastyworks trading platform.

Be sure to leave a comment down below with any questions you may have!

=== RECOMMENDED VIDEOS/RESOURCES ===

Options Trading For Beginners (PLAYLIST): https://www.youtube.com/playlist?list=PL33AZa4cv-o58ldr-5zSn4ROx4SZG7Jyo

tastyworks Tutorials (PLAYLIST): https://www.youtube.com/playlist?list=PL33AZa4cv-o56a2BO3jpK_PBUFe3FdvxP

Option Pricing EXPLAINED: https://youtu.be/-nnJ4pMBaxA

Options Trading 101: https://youtu.be/3bELT5FZCic

COURSES: https://www.projectoption.com/options-trading-courses/

Comments

Isaac Guzman says:

Hey Chris good job once again!
I was Curious as to what happens when your BULL credit spread expired in the money?
Did you have to purchase the 100 shares at the put buy? Was any collateral held up?
If so how much.
You did an outstanding job explaining the spread Max profit and max loss.

Rich Albright says:

Chris,
Good video but it would be helpful for us hearing impaired folks if you talked a bit slower.

Mark Schellhammer says:

Would have been nice to have a brief explanation of managing a loss situation at, say, 2X premium, rather than only showing what happens when both strikes expire ITM and Max Loss occurs.

RM says:

How can he sit there and smile like that when explaining what happens when the stock price falls in between the spread? That's some serious capital needed to just buy 100+ shares of anything worth doing a put spread on.

arupian666 says:

Kids, kids…. if you find yourself in the position shown at 8:54… you've made 66% of max profit with 45 days still to go… IF you don't take your profits off the table that that point, you are, and sorry for being so blunt, a fucking idiot. 10:11… I hate that example. It's how to NOT trade options. "The trader" in that example is displaying pure greed, praying and hoping, going to bed at night in a sweat, contemplating if trading options is really for them. The trader that took profits went to bed and had nice dreams about how he displayed maturity and discipline in taking profits and removing risk. Ask Mike. He'd be APPALLED at the example. He might even do a whiteboard on how NOT to trade options, using that example. – LOL ! I just checked. He did a whiteboard called "Managing Winners" where he talks about taking risk off the table @ 50% max profit.

Bryan Buchanan says:

💯💯💯💯💯💯💯

Big Stef says:

I’ve watched several of you videos (even the 3 hour intro to options epic). Your work is very helpful.

Why would a trader use a bull put spread vs the call spread? Is the level of certainty of stock price movement the deciding factor OR the certainty of a profit the deciding factor?

Why would u chose one over the other?

Chris P says:

Chris thanks for the video. Question to you (this seemed to make sense when I thought about it). When selling a put spread, let's say early on (the first 5 days on 30 DTE) the spread loses most of it's value and you decide to buy back the short put. Would it make sense to keep the long put and not close this out? I would say in this case it's fair to assume the long put is not worth much anymore since it will be further out of the money. So by selling it, there wouldn't be much value here. In this scenario, you give yourself a chance to make money if the spread reverses course. What do you think?

바우와우bowwow says:

thank you for the great video. finally i understand it.

Leslie Liang says:

Hey Chris, since Bull Call Spread and Bull Put Spread are both bullish strategies, how do we decided which one we should use? Thanks for all you do =D

ng sjun says:

Great,thx for sharing!!!

S Sam says:

Very helpful!! Thanks Chris

Jason says:

Question…. What would happen if I opened a bull credit spread at a price currently above the underlying stocks share price?

Hypothetical Scenario:

Let's say stock ABC is currently trading at $1,500 a share. Let's say I'm bullish about the stock and expect it to rise $500 by the expiration date.

Lets say I sell the $2,000 strike (which is currently above the share price) and buy the $1,950 strike. The difference between the two is $50 (x100 = $5,000). Now let's say the credit I received for opening the spread is $4,500. Now let's say on expiration day, the stock closes at $1,900 per share. Does that mean I will only lose my collateral of $500?

Thanks.

Robert Hickey says:

What happens when the stock closes in between strike prices at expiration?

Shoriful Siddiki says:

can you close before the expiration date?

DRFB says:

Nice educative video…..

genericwannabe says:

In example #1 where the bull put spread expires well above the either strike price. Is it safer to let both options expire for maximum profit or to sell just before closing for "near maximum profit"? I've heard the risk of allowing both to expire is that one leg might be assigned/excercised while the other one expires. And then you are holding a bunch assets you don't want, which may lose value by opening the next day.

Robert Hickey says:

What is the benefit of this vs just selling a put?

Ed says:

Again, very helpful and excellent video! Thank you and more power to you!

05it238 says:

Let's say I am in a bull put spread. It's the expiry day, what happens if the stock price is below the break even line but above the long put strike price. If the short put is assigned and I don't have sufficient funds to buy 100 shares and my long put expires worthless, what would happen?

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