The bull put spread is the bread-and-butter trade for income-focused options traders. You're betting that a stock stays above a certain price by expiration, and you get paid upfront for that bet.

How a Bull Put Spread Works

You sell a put option at a strike price near the current stock price and buy a cheaper put at a lower strike. The difference in premiums is your credit.

You profit when: The stock stays above your short strike at expiration (both options expire worthless, you keep the full credit).

You lose when: The stock drops below your short strike by more than the credit you received.

Real Example: Bull Put Spread on MSFT

MSFT is trading at $430. It's been in an uptrend, sitting above its 50-day moving average. You're moderately bullish.

The trade:

  • Sell 1 MSFT $415 put (30 DTE) for $4.20
  • Buy 1 MSFT $410 put (30 DTE) for $3.10
  • Net credit received: $1.10 ($110 per contract)

    • Key numbers:

  • Max profit: $110 (credit received)
  • Max loss: $390 ($5 spread width - $1.10 credit = $3.90 × 100)
  • Breakeven: $413.90 ($415 strike - $1.10 credit)
  • Probability of profit: ~75% (short put at roughly 25-delta)

    • MSFT needs to stay above $413.90 for you to make money. It can drop $16.10 from $430 and you still profit. That's a 3.7% cushion.

    Step-by-Step: Placing the Trade

    Step 1: Pick your stock. Choose something you're neutral-to-bullish on. Avoid stocks with earnings in the next 30 days unless that's specifically your strategy.

    Step 2: Choose your expiration. 30-45 days out is the sweet spot. This is where theta decay accelerates but you still have time to manage if things go wrong.

    Step 3: Select your short strike. Look for the put at 20-30 delta. This gives you a 70-80% probability of expiring out of the money.

    Step 4: Choose your spread width. Common widths are $2.50, $5, or $10 depending on the stock price. Wider spreads collect more premium but risk more.

    Step 5: Check the credit. Make sure the credit you receive is at least 25-33% of the spread width. For a $5-wide spread, you want at least $1.25-$1.65 in credit.

    Managing the Trade

    Here's where most guides stop, but management is where the money is actually made or lost.

    Take profits at 50%. If the spread drops to $0.55 (half the credit), close it. Don't wait for expiration. You've captured most of the profit with less risk of a reversal.

    Cut losses at 2x credit. If the spread is worth $2.20 (2x what you collected), consider closing. The trade thesis has broken down.

    Roll if needed. If MSFT drops toward $415 with 15 days left, you can roll the spread down and out — moving to a lower strike at a further expiration to give yourself more room.

    When the Bull Put Spread Shines

    This trade works best in specific conditions:

  • Rising or sideways markets where stocks tend to hold support
  • After a pullback to support on a stock that's in an uptrend
  • High IV environments where you collect fatter premiums
  • On high-quality stocks like AAPL, MSFT, GOOGL that tend to recover

    • Common Mistakes

    Going too close to the money for more premium. A 40-delta short put has worse odds. The extra credit doesn't compensate for the higher loss rate.

    Ignoring earnings dates. A bull put spread through earnings is a completely different trade. IV crush helps, but the gap risk can wipe you out.

    Not having a management plan. Before you enter, know exactly when you'll take profits and when you'll cut losses. OptionsPilot's position tracking can help you monitor your spreads and set mental targets.

    The bull put spread is simple, effective, and scalable. Master it before moving on to more complex structures.