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Bear put spread

Buy a put and sell a lower-strike put in the same expiration; a bearish debit trade with defined risk and a profit capped at the lower strike.

Payoff of a bull call spread at expiryA flat loss below the lower strike, a rising middle section, and a flat capped profit above the upper strike.Profit / loss per share08895115122100110buy the 100 callsell the 110 callBreakeven 103Max profit 7capped above 110Max loss 3 — the net debitUnderlying price at expiry
Vertical spread: payoff at expiry. Buying the 100 call and selling the 110 call costs 3 net. Below 100 that 3 is the whole loss; above 110 the gain stops at 7, because the sold call gives back every dollar the bought call earns beyond 110.

The mirror image of the bull-call-spread. Selling the lower strike subsidises the long put, which matters because puts usually carry the expensive end of the volatility-skew — you are buying rich premium and selling richer premium.

Because both legs are puts, the structure is far less sensitive to a volatility collapse than a lone long put. That makes it the sensible way to express a downside view into an event where iv-crush would otherwise eat the position.

Example: XYZ at $50. Buy the 45-day $50 put at $2.10, sell the $45 put at $0.65, for a $1.45 debit. Max loss $145, max profit $355 at or below $45, breakeven $48.55. Both legs lose value on an IV drop, so the net damage is small.

Related: debit-spread, bull-put-spread, vertical-spread, volatility-skew

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