A bear put spread is what you trade when you think the market is headed down—but you still want to collect income from selling premium, not gambling on direction.
Here's the core idea: Sell a put at a lower strike, buy a put at a higher strike (both same expiration). You keep the credit spread. The market can stay flat, go up, or go down a bit—and you still profit.
It's the inverse of the put credit spread. Where a put credit spread profits if the market stays flat or goes up, a bear put spread profits when the market stays flat, goes down moderately, or recovers after a dip.
Let me show you how it actually works, when to use it, and how to size it properly.
Analyze your short leg: Our Strategy Analyzer shows premium and assignment probability for cash-secured puts—use it to evaluate the short leg of your bear put spread before adding the long put for protection.
Bear Put vs Put Credit Spread: The Difference
First, let's clear up terminology, because these are often confused.
Put credit spread (neutral-to-bullish):
- Sell a 0.30-0.40 delta put (higher strike, closer to current price)
- Buy a 0.10-0.20 delta put (lower strike, further from price)
- Credit: $0.30-0.50
- Profit if market stays flat, goes up, or dips slightly
- Max profit: Credit received
- Max loss: Spread width - credit (usually the same)
Bear put spread (neutral-to-bearish):
- Sell a 0.50-0.60 delta put (lower strike, at-or-close to current price)
- Buy a 0.20-0.30 delta put (much lower strike, far from price)
- Credit: $0.20-0.40
- Profit if market stays flat, goes down slightly, or bounces back up
- Max profit: Credit received
- Max loss: Spread width - credit
Key difference: The bear put spread sells a deeper OTM put (lower strike) and buys an even deeper OTM put for protection. It's specifically designed for bearish outlook or downside protection.
Here's a visual:
Current SPY Price: $422
PUT CREDIT SPREAD (Neutral-to-Bullish)
Sell $421 Put (0.40 delta, near money)
Buy $419 Put (0.15 delta, for protection)
Credit: $0.35
Max Profit: $0.35
Max Loss: $2.00 - $0.35 = $1.65
BEAR PUT SPREAD (Neutral-to-Bearish)
Sell $420 Put (0.50 delta, deeper OTM)
Buy $418 Put (0.20 delta, way further OTM)
Credit: $0.28
Max Profit: $0.28
Max Loss: $2.00 - $0.28 = $1.72
In the bear put spread, you're selling premium on a put that's already slightly ITM (or right at the money), making it higher probability of expiring worthless. But you're sacrificing some premium ($0.07 less) for the peace of mind that your max loss is defined.
When to Trade Bear Put Spreads
You're not running bear put spreads because you think the market will crash 5%. You're running them because:
- You expect a bounce after a dip → Market drops 1-2%, then recovers
- You have a mildly bearish bias → Market will go down, but not crash
- You want defined risk → Can't tolerate naked put losses
- You're taking profits on holdings → Want to reduce exposure but keep collecting income
Market Conditions for Bear Put Spreads
| Condition | Action | Rationale |
|---|---|---|
| Market just dropped 2-3% | Sell bear puts | Bounce-back expectation; don't want to catch falling knife |
| Market down 5%+ this week | Skip it | Too much bearish momentum; spreads will lose quickly |
| IV percentile > 70% | Sell wider spreads | High IV means premium is rich; can afford wider widths |
| IV percentile < 30% | Reduce size | Low IV means premium is thin; limited upside for risk |
| Fed announcement today | Skip it | Gap risk too high; wait until after |
| Strong downtrend (30-day) | Sell puts OTM | Market is making lower lows; assume another leg down |
| Range-bound market | Sell puts ITM | Safe to sell puts closer to current price |
Strike Selection for Bear Put Spreads
This is where bear put spreads get interesting. You have more flexibility than with call spreads, because you're betting on not going down too much rather than up too much.
Conservative Bear Put Spread
Setup: Sell a put that's 0.5-1% below current price. Buy a put 2-3% below for protection.
Example (SPY at $422):
- Sell the $420 put (0.60 delta)
- Buy the $418 put (0.20 delta)
- Credit: $0.25
- Max loss: $2.00 (spread width) - $0.25 (credit) = $1.75
- Risk/reward: $1.75 risk for $0.25 profit = 7:1 risk-to-reward (bad ratio)
When to use: Only if you're quite bearish and want high assignment probability. Risk/reward is poor here.
Moderate Bear Put Spread (Best for Most Traders)
Setup: Sell a put that's slightly OTM (0.20-0.30 delta). Buy a put 2-3% below for protection.
Example (SPY at $422):
- Sell the $421 put (0.35-0.40 delta)
- Buy the $419 put (0.10-0.15 delta)
- Credit: $0.32
- Max loss: $2.00 - $0.32 = $1.68
- Risk/reward: $1.68 risk for $0.32 profit = 5:1 (still not great)
When to use: You expect moderate downside (market might touch $420, but won't crash below $419). This is the most balanced setup.
Aggressive Bear Put Spread
Setup: Sell a put that's 1-2% OTM (0.10-0.20 delta). Buy a put 3-4% below for protection.
Example (SPY at $422):
- Sell the $418 put (0.20 delta)
- Buy the $415 put (0.05 delta)
- Credit: $0.18
- Max loss: $3.00 - $0.18 = $2.82
- Risk/reward: $2.82 risk for $0.18 profit = 16:1 (terrible ratio)
When to use: Only on super low IV or if you're hedging other positions. The premium doesn't justify the risk.
Rule of thumb: Don't trade bear put spreads unless the credit is at least $0.25-0.30. The risk/reward ratio is worse than call spreads (because puts are naturally higher IV), so you need meaningful premium to justify the capital at risk.
DTE Optimization for Bear Put Spreads
Unlike call spreads (which decay fastest at 1-7 DTE), bear put spreads benefit from longer DTE because:
- You're selling puts, which have naturally higher IV than calls
- Longer DTE = more premium to sell upfront
- You have more time for a bounce-back scenario
DTE Strategy by Market Outlook
| Market Outlook | Ideal DTE | Why | Example Entry |
|---|---|---|---|
| Expecting 1-2 day bounce | 3-7 DTE | Short duration captures decay fast; exit after bounce | Sell 5-DTE, close at 50% in 2-3 days |
| Mildly bearish, 1-2 week outlook | 14-21 DTE | Medium duration; decent premium, reasonable decay | Sell 14-DTE, close at 50% in 7-10 days |
| Hedging long position for month | 30-45 DTE | Long duration; premium accumulation over weeks | Sell 30-DTE, roll when 50% profit or at 21 DTE |
| Aggressive short-term trade | 1-3 DTE | Capture theta acceleration; tight stops required | Sell 3-DTE, close at 50% within 1 day or stop out |
My recommendation for most traders: Enter bear put spreads at 14-21 DTE. This gives you:
- Enough premium to make 50% profit meaningful ($0.30+ credit)
- Time to manage the position if market moves against you
- Flexibility to close early or roll if needed
- Less gap risk than 1-3 DTE
Position Sizing and Capital Allocation
This is critical. Bear put spreads tie up significant capital relative to their credit.
Example Capital Requirements
Bear put spread: Sell $420 put / Buy $418 put on SPY:
- Spread width: $2.00
- Credit received: $0.32
- Capital tied up: $2.00 (the max loss, your broker requires this as margin)
- Capital at risk: $2.00 - $0.32 = $1.68
- Return on capital: $0.32 / $2.00 = 16% per 21 days = ~273% annualized (theoretical)
Compare to naked put:
- Naked $420 put: Credit $0.50, capital tied up $42,000, return $0.50 = 1.2% per 21 days = ~20% annualized
Bear puts look better on the surface (16% vs 1.2%), but that's misleading. If the market crashes, both positions blow up—but the naked put gives you $0.18 more credit for the same max loss.
The real benefit of bear put spreads:
- Psychological relief (defined loss limit helps you sleep)
- If assigned on the short put, your loss is capped by the long put
- Defined risk = easier position sizing and account management
Proper Position Sizing
Rule: Each bear put spread should risk no more than 2-3% of account capital
Example with $50,000 account:
- Max risk per trade: $1,000-1,500
- Bear put spread width: $2.00
- Max spreads per trade: 5-7 contracts
- Capital tied up: $10,000-14,000
This way:
- You can run 3-4 bear put spreads simultaneously without over-exposure
- One bad move (unexpected gap down) costs 2-3%, not 10-20%
- You have room to scale if winning
Real Example: Bear Put Spread in a Down Market
Scenario:
- Date: November 4, 2025
- SPY is at $422, down $3 this week
- You expect a bounce (not a crash)
- IV percentile: 60% (moderate IV, decent premium)
Setup:
- Sell the $420 put (14 DTE) for $0.32
- Buy the $418 put (14 DTE) for $0.08
- Net credit: $0.24
- Max loss: $2.00 - $0.24 = $1.76
Profit at key price levels (at expiration):
| SPY at Expiration | Short Put Value | Long Put Value | P&L |
|---|---|---|---|
| $425+ | $0 | $0 | +$0.24 (max profit) |
| $420 (at strike) | $0 | $0 | +$0.24 (max profit) |
| $419 | -$0.01 | +$0.01 | +$0.24 - $0 = +$0.24 |
| $418 (at long strike) | -$0.02 | +$0.02 | +$0.24 - $0 = +$0.24 |
| $415 | -$0.05 | +$0.05 | +$0.24 - $0 = +$0.24 |
| $410 | -$0.10 | +$0.10 | +$0.24 - $0 = +$0.24 - $2 = -$1.76 (max loss) |
P&L by exit date:
| Date | SPY | Short Put | Long Put | Spread Value | P&L | Exit Action |
|---|---|---|---|---|---|---|
| Entry | $422 | $0.32 | $0.08 | $0.24 | $0 | Entered at credit |
| Day 3 | $423 | $0.20 | $0.04 | $0.16 | +$0.08 | Hold |
| Day 6 | $420 | $0.35 | $0.10 | $0.25 | -$0.01 | Ouch, market dipped |
| Day 6 | $423 | $0.18 | $0.05 | $0.13 | +$0.11 | Close here, take profit |
| Expected close | By day 14 | varies | varies | $0-0.24 | +$0.12-0.24 | 50-100% profit |
What happened:
- You sold the spread for $0.24 credit
- Market dipped to $420 (your short strike) by day 6, making the position worth $0.25 (slightly worse)
- Market bounced back to $423; spread value compressed to $0.13
- You closed for $0.11 profit (46% of max profit) in just 6 days
- Your capital is freed up for the next trade
This is the bear put dream: market dips as expected, then bounces. Your spread profits because IV dropped and the market moved in the direction you expected.
Adjustments: What to Do When Market Keeps Falling
Bear put spreads go sideways or up, and your profit shrinks. What's your playbook?
Adjustment 1: Close and Accept the Loss
Scenario: You sold a $420/$418 bear put spread for $0.24 credit. Market is now at $415, spread is worth $0.90. You're down $0.66.
Option 1: Close it
- Cut your loss at -$0.66 (take the $1.76 max loss risk down to $0.66 realized loss)
- Free up capital for other trades
- Move on
When to do this: If market is below your short strike and trending down. Waiting for a bounce is hopeful; prices below your strike are losing you money daily.
Adjustment 2: Roll Down and Out
Scenario: Same as above. Market at $415.
Option 2: Roll
- Buy to close the $420/$418 spread (pay $0.90)
- Sell a new $416/$414 spread expiring 7 days later (collect $0.20)
- Net debit to roll: -$0.70
- New max risk: $2.00 - $0.20 = $1.80
- New max loss: $0.70 + $1.80 = $2.50 total
When to do this: Only if:
- You believe the bounce will happen within the 7-day window
- You can accept a higher total loss ($2.50)
- You're patient enough to hold through the dip
Honest truth: Rolling spreads in a downtrend usually doesn't work. You're throwing good money after bad. Better to close, take the loss, and redeploy capital to a new setup after the market stabilizes.
Adjustment 3: Close the Short Put, Keep the Long Put
Scenario: Market at $415.
Option 3: Partial close
- Buy to close the short $420 put (pay $0.80)
- Keep the long $418 put as a cheap "lottery ticket" hedge for further downside
- You paid $0.24 credit - $0.80 close = -$0.56 net loss
- But you still have $0.08 of your long put value as insurance
When to do this: Rare, but if you're truly scared of a crash and want to keep cheap downside protection. Cost: $0.56 for a potential crash hedge that's worth $0.08.
My take: This is overthinking it. Just close the whole spread and move on.
Bear Put Spreads vs Other Bearish Strategies
| Strategy | Max Profit | Max Loss | Capital At Risk | When To Use |
|---|---|---|---|---|
| Bear put spread | Credit | Spread - credit | Spread width | Modest downside; want defined risk |
| Naked put | Credit | 100% loss (stock price) | Stock price | Willing to own stock; confident |
| Put debit spread | Spread - credit | Credit paid | Spread width | Very bearish; willing to spend capital |
| Short put + call spread hedge | Limited | Defined | Medium | Bearish but want risk cap |
| Bear call spread | Lower | Lower | Lower | Less premium, less risk (for call spreads) |
Most traders' mistake: They think bear put spreads are "safer" than naked puts. They're not—they're just psychologically easier because your loss is defined. But you sacrifice $0.10-0.20 of premium for that comfort.
If you're going to run bear put spreads, do it because:
- You want the defined risk psychology
- You're newer to spreads and want to learn with limited loss
- You're hedging long stock and want to cap downside
Don't run them thinking you've found a "safer" way to sell puts. You haven't. You've just capped your max loss while capping your max profit too.
Real-World Bear Put Spread Calendar
Here's a realistic weekly setup for bear put spreads:
Monday:
- Market overview (is it trending down, or just pullback?)
- Check IV percentile (above 50%? Good. Below 30%? Skip it)
- If IV high and market down 2-3% this week: Sell 14-21 DTE bear puts
- Size: 3-5 contracts per setup (adjust for account size)
Tuesday-Wednesday:
- Monitor position (still holding? Monitor P&L)
- If 50% profit: Close it and redeploy capital
Thursday:
- If not closed yet: Assess whether market is bouncing or crashing
- Bouncing: Hold for max profit or close at 50%
- Crashing: Close for loss or accept you're wrong
Friday:
- All positions should be closed or rolled by end of day
- Never hold bear put spreads (or any spreads) into the weekend
Internal Links: Related Strategies
Master these related strategies to become a complete options income trader:
- Put Credit Spreads: Risk-Defined Income Strategy – The bullish counterpart; understand both for flexibility
- Options Greeks Explained: Income Trader's Guide – Delta and theta behavior in spreads
- Cash-Secured Puts Playbook: DTE Optimization & Assignment Risk – Understanding put assignment; critical for managing spreads
- Call Credit Spreads: Bearish Income with Defined Risk – Similar spread mechanics; learn both directional spreads
The Bottom Line: When Bear Puts Make Sense
Bear put spreads are not the "best" spread strategy. They're not the easiest, or highest-probability. They're just a tool for a specific job:
Use bear put spreads when:
- Market is down 2-3% and you expect a bounce within 1-2 weeks
- You want defined risk (psychological comfort matters)
- You're newer to spreads and want to practice with limited loss
- You're hedging long positions and need downside cap
Don't use them when:
- IV is low (premium isn't worth it)
- Market is trending down hard (fight the trend at your own peril)
- You're chasing spreads after market crashes (FOMO trading)
- You're sacrificing too much premium for the "safety" of defined risk
Remember: The best bear put spread is the one you don't put on. If you're not truly bearish, or IV is weak, there are better trades. Patience beats trying to force a bearish setup in a bull market.
Platform Tools for Bear Put Spreads
When managing bear put spreads, use Days to Expiry or similar platforms to:
- Track spread width and credit collected
- Monitor delta decay on short vs long strike
- Set alerts for key price levels (your short strike, support levels)
- Measure bear put spread P&L separately from other strategies
- Calendar upcoming expirations so you don't accidentally hold into expiration