Bull Put Spread (Put Credit Spread) Explained

A bull put spread is an options strategy where you collect a payment up front in exchange for taking a defined, limited risk that the market falls. Traders also call it a put credit spread. Both names describe the same trade. This article explains how it works with real numbers, what it can lose, and where it fits.

How to read the FIREDesk numbers in this article. They come from our paper-trading record (14 May to 9 Oct 2026): no real capital was used, option prices are estimated by a model rather than taken from real fills, and 13 of the 102 logged signals use credits calibrated from historical data. The model has no sudden jumps in volatility, so real fills and real stops would be less favourable. On 12 October 2026 we also fixed a calculation error that had recorded stop-losses the market prices did not justify; the figures here are the corrected ones. It is a short, early record and it is not a forecast. Full detail is on the performance page.

What is a bull put spread?

You open two put options on the same underlying, with the same expiry:

• Sell a put at a higher strike. You receive a premium.
• Buy a put at a lower strike. You pay a smaller premium, and this put caps your loss.

The difference is the net credit, which you keep if the spread expires worthless. You make money when the underlying stays above the short strike or rises, which is why it is called "bull". It is a put credit spread because it uses puts and you receive a credit.

A worked example with a real signal

This is the signal logged on 1 October 2026, when SPY was around $763.67 (paper trading, 120 days to expiry):

• Sell the 695 put and buy the 685 put, both expiring 29 January 2027. The spread is $10 wide.
• Net credit: $1.23 per share, which is $123 per contract (one contract covers 100 shares).
• Maximum profit: the $123 credit, if SPY stays above 695 at expiry.
• Maximum loss: ($10 - $1.23) x 100 = $877 per contract, if SPY is at or below 685 at expiry.
• Break-even: 695 - 1.23 = 693.77.

Three outcomes at expiry: above 695, you keep the whole $123. Between 685 and 695, you lose part of it (at 690, for instance, about $377). At or below 685, you lose the maximum $877. The short strike is about 9% below the price at entry, which is why the credit is small compared with the risk.

Bull put spread or put credit spread: the same thing

The two names are interchangeable. What people often confuse with it:

• Bull call spread: also bullish, but you pay a debit up front (buy a lower call, sell a higher one). Different payoff, different risk.
• Put debit spread (bear put spread): bearish. You buy a higher put and sell a lower one, and profit when the price falls.
• Bear call spread: the opposite credit spread: bearish, built with calls.

When it is used

• When you expect the price to stay flat or rise, not to crash.
• When you want a defined maximum loss: unlike a naked short put, the long put limits the damage (see put spread vs naked put).
• When you accept a payoff that is lopsided: a small gain most of the time against a larger loss when it goes wrong.

The risks to understand before you trade

• The risk is larger than the reward. In the example, you risk $877 to make $123, a ratio of about 7 to 1. A strategy like this needs to win often, or to cut losses early, to come out ahead.
• Gaps. A fast fall can reach the long strike before you can close.
• Early assignment. SPY options are American style, so the short put can be assigned before expiry. See assignment risk explained.
• Liquidity and costs. Wide bid/ask spreads and commissions eat a small credit.

How FIREDesk uses it

FIREDesk signals are bull put spreads on SPY with a short strike near 0.10 delta, a take profit at half the credit and a stop at 1.5 times the credit, with a trend filter on the 200-day EMA. The rules are in the complete SPY bull put spread strategy guide. How the example above is built step by step is in the put credit spread example.

Notice that the record shows a win rate of 83% (70 of 84 closed trades hit the take profit, 14 hit the stop). Treat it as a ceiling rather than an expectation: the prices are modeled and many trades overlap. With a payoff that is roughly one to one on the credit because of the exits, the numbers that matter are the average win, the average loss and how they are measured. We explain this in our backtesting article.

Educational content, not financial advice. Options trading involves significant risk of loss, including the loss of the whole amount at risk on a trade. Past and simulated results do not guarantee future performance.