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Bybit Learn
Bybit Learn
8 juil. 2022

What Is a Bull Put Spread?

The bull put spread is a two-legged options strategy used by traders when they believe that the market is moderately bullish. This strategy is identical to the bull call spread in payoff structure, but is slightly different from it in terms of execution. Instead of call options, put options are used in this strategy — hence the name bull "put" spread. Let's get into the details.

Bull Put Spread Setup

The bull put spread is one of four vertical spread options strategies available. It is an advanced options trading strategy that uses a low amount of capital to profit from a wide range of trading environments.

The bull put spread looks to profit from two options. The first option is bought at a lower strike price and expiration date, while the second is written with a higher strike price, but the same expiration date.

Source: Investopedia

Bull Put Spread

The bull put spread is an options strategy employed by investors who anticipate a slight increase in the underlying asset price. It is a bullish strategy that seeks to profit off a volatile market that’s primed to go up. 

This strategy involves using two options to create a profit range. In its setup, the options trader buys an out-of-the-money (OTM) put option and sells an in-the-money (ITM) put option. This will create an options range with one high strike price and one low strike price. The difference between the premiums of these two options results in a net credit for the investor.

Premium of OTM Put Option − Premium of ITM Put Option = Net Credit

For example, if a trader thinks that the price of Bitcoin, trading hypothetically at $20,000, will increase moderately in the near future, they will buy an OTM put option at $23,000 and sell an ITM put option at $18,000. Profit will be made if, at expiration, Bitcoin closes at the $23,000 level or higher. However, the trader will incur a loss if BTC’s price falls below the current market price.

Bull Put Spread vs. Bull Call Spread

A bull put spread involves writing one put option while concurrently buying another put option, but with a lower strike price and the exact same expiration date.

On the other hand, a bull call spread involves buying one call option and simultaneously selling another call option (for the same underlying asset) with the exact same expiration date, but a higher strike price.

Who Is the Bull Put Spread For?

The bull put spread is a highly technical strategy. While not impossible for intermediary-level traders, advanced/expert options traders will likely find the bull put spread easier to execute.

When to Use the Bull Put Spread

The range of ideal market conditions for a bull put spread is very limited, and most ideal when the market is slightly bullish.

In a full-blown bull market, the bull call spread will help the trader earn more returns than with the bull put spread. In a bearish market, the bull put strategy will result in losses.

Breakeven Point

The breakeven point of a bull put spread is simply the short put strike minus the premium received. 

Breakeven Point = Short Put − Premium Received

For example, if you sell a bull put spread with a $23,000 short put and collect a $3,220 premium, the position’s breakeven price will be $23,000 - $3,220 = $19,780.

Bull Put Spread Sweet Spot

The bull put spread sweet spot is when the stock is at or above the strike B price at expiration. In this case, both options will expire worthlessly. Therefore, the bull put spread option strategy reaps maximum profit that’s equal to the credit taken when you’re entering the position.

Adjustments to Make in Bearish Markets

If the price of the underlying asset has decreased and the position is under threat, bull put spreads might be modified. To increase the likelihood of success as the trade nears expiration, an investor has two options strategies:

  1. If the stock price has dropped, an iron condor can be formed by opening an opposite bear call credit spread above the put spread. If the spread width and number of contracts remain unchanged, more credit will be received, and no more risk will be introduced to the position. The breakeven point will be moved lower, lowering risk and increasing the strategy's likelihood of success.
  2. An opposing bear call credit spread with the same strike price and expiration date as the put spread may be opened if the stock price has significantly declined and the short option is "in the money." This will result in an iron butterfly. If the spread width and number of contracts remain unchanged, more credit will be received, and no further risk will be introduced to the position.

Maximum Take-Profit Potential

In this strategy, the profit potential is capped. The main opportunity for profit is when the price of the cryptocurrency asset is above the strike price at the expiration date. This way, the trader profits on the premium earned. 

Maximum Incurred Losses Potential

Just as the profit is capped, losses using the bull put strategy are also capped. When using this strategy, the worst that can happen is for the price of the crypto to be lower than the strike price (price of crypto < strike price). This will cause the trader to buy the crypto at a loss. Maximum loss can be calculated by subtracting the premium paid from the cost of the strikes.

Maximum Loss = Cost of Strikes − Premium Paid

Bull Put Spread Example

Let’s apply this strategy to trade Bitcoin options on the Bybit exchange, from a first-person POV. 

As an options trader, I believe that the price of Bitcoin (which is currently at $20,000) is going to surge in the next couple of weeks. 

Source: Bybit | BTC/USDT

Visit the Bybit exchange → DerivativesUSDC Options.

Source: Bybit

Let’s apply the bull put spread strategy to BTC options. 

As discussed above, the first step is to buy a put option. I’m buying a BTC-15JUL22-17000-P option with a premium of $200.

Source: Bybit

Simultaneously, I’m selling the BTC-15 JUL22-22000-P put option for $2,160. The net credit I receive is $1,960 when entering the spread position.

Source: Bybit

Bull Put Spread Tips

  • It’s ideal for both options to expire worthlessly, as you wouldn’t need any commissions to leave your positions.
  • To increase your likelihood of success, make Strike B a standard deviation OTM, but not so far as not to reduce the net credit received.
  • Barring other conditions like implied volatility, the best time to run this strategy is 30–45 days from expiration.

Margin Requirements

The margin requirement is simply the per unit difference between the strike prices of both put options.

Theta Decay Impact

It seems reasonable to believe that time decay would be advantageous, regardless of its theoretical effect on the two contracts. Theta is the rate by which the time decay on an option is measured. 

The argument around the Theta decay impact is that, provided every other factor remains constant, most options will lose value and become unattractive to the trader as they near maturity. Theta is always represented as a negative number, and is subtracted to form the value of the options.

Example: If Theta is −2 on a given Tuesday, the value of the asset's options is reduced by 2 on that day.

Implied Volatility Effect

The effects of volatility fluctuations on the two contracts may significantly negate each other because the strategy calls for shorting one put and buying another with the same expiration.

The market's estimate of the crypto price's direction and the underlying option’s supply and demand directly impact implied volatility. An increase in the demand for the option will lead to an increase in implied volatility.


  • A key advantage of the bull put strategy is that there’s little possibility of incurring large losses on your position. The limited risk between the high put strike price and the low put strike price makes it attractive to most traders.
  • "Time decay" refers to the rate of decline in the value of options contracts over time. Most options go unexercised or expire, and the bull put spread takes advantage of that.
  • As with every other vertical spread option, the margin requirements of the bull put spread are low.
  • Lastly, one can adjust the bull put spread to fit their risk tolerance level/risk appetite. The maximum risk and the greatest potential gain of the position will be reduced if the trader chooses a tight spread where the put strike prices are close together. While a larger spread would result in a greater loss should the price fall, an aggressive trader might choose it to maximize gains.


As mentioned previously, this strategy performs best in markets that are moving sideways to slightly higher. In a market upturn, the trader would be better served by employing a bull call spread or buy calls; and in a market downturn, the bull put spread would typically be ineffective.


  • As much as the losses are capped, the gains from options using this strategy are also capped. One risk that should be noted is that the profits from this options strategy may not be able to cover the losses incurred, if there’s even a single misstep
  • Before expiration, there is a large risk of assignment on the short put leg, particularly if the cryptocurrency goes deep ITM. As a result, the trader may be obliged to purchase crypto for a price that’s far higher than the going market rate. If there’s a significant gap between the strike prices of the short put and long put in the bull put spread, this risk is increased.


The covered call strategy, an alternative to the bull put spread, involves owning an underlying cryptocurrency and selling OTM call options in a similar ratio. The call option won't be exercised if the price of the coin stays flat. Up to that point, you'll earn the premium stated in the contract. With a covered call, the probability of earning a profit is high, but there’s little flexibility and you may not be able to earn as much (as with other strategies).


The options market can be complicated and the topic is often overwhelming, especially to the uninitiated. Combined with technical analysis, however, crypto options are an excellent way to gain exposure to the market. The bull put spread strategy is one of several trading strategies you can profit from. Note, however, to always DYOR before entering any trade. Never forget that capital preservation is the first rule of investing: Only trade what you can reasonably stand to lose.

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