What is a Bull Put Spread?
A Bull Put Spread is a moderately bullish options strategy that lets you earn a credit upfront with defined risk. You sell a put option at a higher strike price and buy another put option at a lower strike price — both with the same expiry.
In simpler words: You collect a premium by taking on limited risk, betting that the market won’t fall below a certain level.
Benefits:
- Generates income upfront
- Has limited loss
- Suitable for range-bound or moderately bullish markets
- Defined risk-reward profile
When Should You Use a Bull Put Spread?
- You expect the market to stay above a certain level or rise slightly
- You want to collect premium with limited downside
- Volatility is moderate to high, giving better premiums
Entry and Exit Strategy
When to Enter:
- Near support zones or during pullbacks
- When IV is slightly elevated (to collect higher premiums)
- Early in the expiry cycle to benefit from time decay
When to Exit:
- If the underlying approaches your lower strike (risk zone)
- If your target profit is met (say 50–70% of max profit)
- Use OptionX’s live P&L chart to track breakeven and exits
Example: Bull Put Spread with NIFTY (Jun 05, 2025 Expiry)
Let’s break down a real example using OptionX to profit from a moderately bullish view on NIFTY.
Strategy Setup:
- Instrument: NIFTY
- Expiry: 05 June 2025
- Type: Put Options
- View: Moderately Bullish
You expect NIFTY to stay above 24,750 in the short term.
Why This Strike Pair?
The 24,750 PE is just below the current price, offering a healthy premium due to its proximity to the spot. You pair it with the 24,550 PE to limit your risk — and the slight IV difference between them helps maintain a neutral skew.
- 24,750 PE IV: 16.34
- 24,550 PE IV: 16.52
Balanced implied volatility indicates a stable market, making this spread efficient.
Key Metrics of This Strategy
Your maximum profit is ₹6,037.50 — you earn this if NIFTY expires above 24,750.
Your maximum loss is capped at ₹8,962.50 — this happens only if NIFTY closes below 24,550.
Your breakeven point is at 24,669.5 — above this, the strategy is profitable.
Risk-to-Reward Ratio is 1.48 — you risk ₹1 to make ₹0.67.
Funds required to execute the strategy is ₹46,392.23 — includes margin benefits.
POP (Probability of Profit) is 55% — decent odds for a range-bound market.
How to Execute This on OptionX
Step 1: Open the Strategy Builder
Login to OptionX → Click Strategy Builder
Step 2: Select the Bull Put Spread template
Step 3: Click on Price ladder
Step 4: Select quantity and order type, and Click on bid and offer columns to Sell or Buy.
