Bull Put Spread Strategy Name: BULL PUT SPREAD Direction: Bullish Max. Risk: Capped Type: Income Volatility: N/A Max. Reward: Capped Proficiency: Intermediate.

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Presentation transcript:

Bull Put Spread Strategy Name: BULL PUT SPREAD Direction: Bullish Max. Risk: Capped Type: Income Volatility: N/A Max. Reward: Capped Proficiency: Intermediate Legs: 1. Buy lower Strike (SP L ) Puts 2. Sell higher Strike (SP H ) Puts Entry: Try to ensure that the trend is upward or range bound.

Risk Profile : Net Credit: higher strike premium - lower strike premium Max. Risk: (Higher SP – Lower SP) – Net Credit Max. Reward: Net Credit BEP: Higher SP - Net Credit Investment: Span Margin ROI: Profit/Investment

Exit: With this strategy, you can simply unravel the spread by buying back the puts you sold and selling the puts you bought in the first place.

Example: Month Long/Short Option Call/Future/Put Price Qty Oct Long 5500 Put Oct Short 5800 Put Net Credit: Max. Risk: Max. Reward: BEP: 5740 Investment: ROI: UP: 5700

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