What Is a Bull Put Spread on SPY?

A bull put spread is a defined-risk options strategy where you simultaneously sell a put option and buy a lower-strike put option on the same underlying asset and expiration date. The goal: collect a net credit upfront and keep it if the underlying stays above your short strike at expiration.

On SPY, this strategy is popular because of its deep liquidity, tight bid-ask spreads, and exposure to the broadest US market benchmark. When you sell a bull put spread on SPY, you express the view that the S&P 500 will not fall below a certain level by your chosen expiration date.

How to Pick the Right Strikes Using Delta

An option with a delta of 0.10 has roughly a 10% chance of expiring in the money — approximately 90% theoretical probability the trade expires worthless. The 0.10 delta short strike is the anchor point for income sellers who prioritize consistency over yield: high win rate, manageable premium, and a clear objective structure.

To find your 0.10 delta put on SPY, open your broker options chain, filter for your target expiration (30-45 DTE), and scan the delta column until you find the strike closest to 0.10. That is your short put. Buy the next strike lower for protection.

When to Enter: The EMA-200 Rule

The single most impactful filter: only sell when SPY is above its EMA-200. When SPY is below this long-term trend indicator, skip the trade entirely.

When SPY is in a confirmed uptrend, put spreads benefit from positive price drift and mean-reverting volatility. Below the EMA-200, win rates drop sharply — often by 15-25 percentage points.

Take Profit and Stop Loss Rules

Take profit at 50%: Close a winning spread when it reaches 50% of maximum profit. This captures most of the gain while freeing up buying power faster.

Stop loss at 1.5x the credit: If you collected $0.60 in premium, close if it costs $0.90 to close. Limits realized losses and keeps your account in position to recover.

Why SPY Specifically?

  • Liquidity: The most liquid options in the world — $0.01-0.05 wide bid-ask spreads.
  • Diversification: 500 companies — no single-name event risk.
  • Long-term upward drift: Structural bias that benefits put sellers over time.
  • Section 1256 tax treatment: 60/40 long/short-term blended rate regardless of holding period.

Putting It All Together

Check SPY vs EMA-200. If above: find 0.10 delta put, sell it, buy the strike below, set 50% take profit and 1.5x stop. Repeat each cycle. The edge comes from consistency, not predicting the market.

If you want this delivered every morning without running the calculations yourself, FIREDesk (firedesk.co) automates exactly this — publishing the exact 0.10 delta bull put spread parameters each session.

Frequently Asked Questions

How does the 0.10 delta short strike improve my win rate on SPY bull put spreads? +

A 0.10 delta put has approximately a 10% probability of expiring in the money, meaning roughly 90% of trades at this strike will expire worthless and you keep the full credit. This high win rate comes from selling puts significantly out of the money. For example, if SPY is at $450, a 0.10 delta put might be around the $445 strike—you collect the premium immediately, and you only lose money if SPY falls below $445 by expiration. This predictable structure makes it ideal for consistent income over maximum profit.

Should I enter a bull put spread on SPY if it's trading below the 200-day EMA? +

No. The EMA-200 rule states you should only sell bull put spreads when SPY is above its 200-day exponential moving average. This filter protects you from selling puts during downtrends, when assignment risk and losses increase significantly. If SPY is below the EMA-200, skip the trade entirely and wait for price to reclaim that level. This single rule is described as the most impactful filter for consistent bull put spread profitability because it aligns your bias with the underlying trend.

What is my maximum loss and maximum profit on a SPY bull put spread? +

Maximum profit equals the net credit you collect upfront. For example, if you sell a $445 put for $0.80 and buy a $440 put for $0.30, your max profit is $0.50 per share, or $50 per contract (×100). Maximum loss equals the width of your strike spread minus the credit collected: ($445 − $440) − $0.50 = $4.50 per share, or $450 per contract. This defined-risk structure means you know your downside before entering the trade.

What expiration date should I target for SPY bull put spreads as a FIRE investor? +

Target 30–45 days to expiration (DTE). This timeframe balances premium collection against time decay and gamma risk. With 30–45 DTE, you capture meaningful theta decay without the accelerating gamma and pin risk that comes with very short expirations (0–7 DTE). For a FIRE investor prioritizing consistent monthly or bi-weekly income, rolling or closing spreads in the 30–45 DTE window creates a repeatable, sustainable income-generating system tied to your passive portfolio.