Bear Put Spread

A bear put spread (also called a put debit spread) is a vertical spread strategy used when a trader expects a moderate decline in the underlying asset. The strategy involves buying a put option at a higher strike price and simultaneously selling a put option at a lower strike price, both with the same expiration date. The net cost (debit) is the maximum potential loss, while the maximum profit is the difference between the strike prices minus the premium paid. This strategy limits both risk and reward compared to buying a put outright. It reduces the cost of the position by collecting premium from the short put, but also caps the potential gain at the lower strike price.