Strategy
Bear put spread
Buy a put and sell a lower-strike put with the same expiry. A cheaper way to take a falling view than a single put, with capped gains.
View: bearishDebit (you pay)Limited risk
How it is built
- Buy 1 lot of an at-the-money put (PE).
- Sell 1 lot of a lower-strike put (PE), same expiry.
A structure for a view that the index will fall moderately by expiry, with a known maximum loss.
Risks
- The whole net premium is lost if the index ends at or above the upper strike.
- Profit is capped below the lower strike.
- Time decay works against the position while the index stays above the break-even.
How the Greeks behave
- Delta
- Negative, smaller than a single put
- Theta
- Usually negative near the upper strike
- Vega
- Small; the legs offset each other
Worked example on Nifty 50
| Leg | Premium per unit | Cash flow |
|---|---|---|
| Buy 1 lot 25,000 PE | ₹178.07 | −₹11,575 |
| Sell 1 lot 24,500 PE | ₹32.49 | +₹2,112 |
Net paid
₹9,462
Max profit
₹23,038
Max loss
₹9,462
Break-even
24,854
Profit and loss at expiry
For the whole position, before charges.
Premiums are theoretical Black–Scholes values from round, illustrative inputs, not market prices. Charges and margin are not included.Price a single leg with your own numbers.
Bear put spread on other indices
Frequently asked questions
What is the maximum loss on a bear put spread?
The net premium paid plus charges, if the index ends at or above the higher strike.
How is a bear put spread different from buying a put?
It costs less and has a lower break-even move, but the profit stops growing below the lower strike.
When is the maximum profit reached?
At expiry, with the index at or below the lower strike: the strike difference minus the net premium, times the lot size.