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Bull put credit spread

STO (sell to open) a higher put and BTO (buy to open) a lower put. Collect a credit. Flatten with BTC (buy to close) and STC (sell to close).

STO (sell to open) an OTM (out of the money) put, BTO (buy to open) a further OTM (out of the money) put as a wing. You want the stock above the short strike. Max gain is the credit. Max loss is the width minus the credit. Unlike a CSP (cash-secured put), you do not park the full strike in cash.

MSFT $420. STO (sell to open) $410 put at $4, BTO (buy to open) $400 put at $1.50. Credit $2.50. Keep $250 if it stays up. Crash through $400: lose about $750.

The lab is that credit pair. Slide through $410: defined risk shows as a floor, unlike the cash-secured put lesson.

Bull put — credit if the stock stays upSell a put, buy a lower put as a wing. Max gain is the credit. Max loss is the width minus the credit.Bull put — credit if the stock stays upTeaching sketchwingshort K · keep creditmax loss = width − credit
STO $410 put, BTO $400 put, credit $2.50. Stay above $410: keep $250. Crash through $400: lose about $750. Not a cash-secured put.

Teaching lab

Short higher put, long lower put

MSFT $420. STO $410 at $4, BTO $400 at $1.50. Credit $2.50. Defined risk vs a CSP.

P/L / share
-0.50
×100
-50
Delta
+0.115
Gamma
-0.0022
Theta / day
+0.0276
Vega / vol pt
-0.0815

P/L / share

vs the lesson entry

2.130.00-5.54$380$400$420$440$460

Delta

share-equivalent

0.1370.024$380$400$420$440$460

Gamma

peaks near the strikes

0.00290.0000-0.0027$380$400$420$440$460

Theta / day

clock

0.0380.000-0.042$380$400$420$440$460

Vega / vol pt

fear priced in

0.0860.000-0.102$380$400$420$440$460

Rho / rate pt

small at 30 days

0.0500.009$380$400$420$440$460

Keep $250 if it stays up. Crash through $400: about −$750. Teaching only.

Compare: cash-secured put (this is the defined-risk version)

Tickets for this structure

BTO (buy to open) · STO (sell to open) · BTC (buy to close) · STC (sell to close). Illustrative fills only. We never send these orders.

STO (sell to open)

Open a short

Sell to open (short put)

MSFT $420. STO (sell to open) 1× 30-DTE (days to expiration) $410 put at $4.00. You want MSFT above $410.

BTO (buy to open)

Open a long

Buy to open (wing)

BTO (buy to open) 1× 30-DTE (days to expiration) $400 put at $1.50. Credit $2.50. Max gain $250. Max loss $750. BE $407.50.

BTC (buy to close)

Close a short

Buy to close (short put)

Close: BTC (buy to close) the $410 with STC (sell to close) the $400. Leave the wing and you are long a cheap put.

STC (sell to close)

Close a long

Sell to close (wing)

Finish $415: both die, keep $250. Finish $395: spread ≈ $10, lose about $750.

Credit put vs cash-secured put

A CSP (cash-secured put) needs cash for 100 shares at the strike. A bull put spread needs margin for the width minus the credit. Defined risk is why this desk prefers the spread when you do not want the stock. Assignment on the short still means 100 shares unless the long put covers — keep both legs on until you are flat.

How the Greeks move

Short higher put plus long lower put: positive delta (you want the stock up), you collect theta, net vega is smaller than a naked CSP (cash-secured put). Slide through $400: P/L (profit and loss) stops falling at the width.

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Teaching numbers only — not a live quote, not a fill, not financial advice. All lessons · Back to Practice · Replay · Journal.