# Bull Put Spread

A Bull Put Spread is a type of vertical spread strategy used in options trading

A Bull Put Spread is a type of vertical spread strategy used in options trading, employed when the trader believes the price of an underlying asset will rise moderately. It involves selling a put option while simultaneously buying another put option with the same expiration date but a lower strike price.

**How It Works:**

**Sell a Put Option:**The trader sells a put option with a specific strike price. This is known as the "higher strike price."**Buy a Put Option:**At the same time, the trader buys another put option with a lower strike price. This is known as the "lower strike price."

**Potential Profit and Loss:**

**Maximum Profit:**Limited to the net premium received when establishing the spread. This profit is realized if the stock closes upon expiration at or above the higher strike price.**Maximum Loss:**The difference between the strike prices minus the net premium received. This loss is incurred if the stock closes upon expiration at or below the lower strike price.

**Benefits:**

**Premium Income:**By selling the higher strike put, the trader earns a premium that can offset some or all of the cost of the bought lower strike put.**Defined Risk:**The Bull Put Spread has a clearly defined maximum potential loss, unlike naked put selling where the loss can be substantial if the stock plummets.

**Drawbacks:**

**Capped Profit:**Profit potential is limited to the net premium received.**Margin Requirement:**Some brokers might require a margin when you sell the higher strike put.

**Example:**

Let's assume a trader believes Nifty Index, currently trading at ₹19,996, will stay above ₹19,900 for the next month. The trader could:

- Sell a 20000 put option for a premium of ₹210.
- Buy a 19750 put option for a premium of ₹138.

The net premium received (or maximum profit) is ₹72 (₹210 - ₹138). If Nifty stays above ₹20,000 at expiration, the trader keeps the ₹72 premium. If Nifty falls below ₹19,750, the maximum loss of ₹178 will be incurred (₹250 difference between strikes - ₹72 net premium).

In summary, a Bull Put Spread is a strategy favored by options traders who have a moderately bullish stance on a stock or believe the stock will remain stable. It allows them to earn a premium with a defined risk while benefiting from a moderate price increase or stability in the underlying asset.

### Other Strategies

## Iron Condor

A strategy designed to profit from low volatility in the underlying asset, combining a bullish put credit spread and a bearish call credit spread to it.

## Iron Butterfly

This is a strategy which profits from low volatility in the price of the underlying asset while minimizing risk.

## Short Strangle

A short strangle is a non directional trading strategy where an investor sells an (OTM) call option and put option on the same underlying asset simultaneously.

## Short Straddle

A Short straddle is considered neutral or non-directional because it profits from minimal price movement in the underlying asset.

## Put Ratio Backspread

The Put Ratio Backspread strategy involves selling and buying put options in a specific ratio.

## Bear Call Spread

A Bear Call Spread is an options trading strategy that's used when a trader believes the price of an underlying asset will go down, but not significantly.

## Bear Put Spread

A Bear Put Spread is a type of vertical spread strategy used in options trading.

## Long Put

Long Put option is the most basic & simplest strategy. It is recommended or implemented when we expect the underlying asset to show significant downside move.

## Short Call

Short Call strategy is employed in a bearish or neutral market outlook, where the underlying asset's price is expected to remain stable or fall.

## Call Ratio Backspread

The Call Ratio Backspread strategy involves selling and buying call options in a specific ratio.

## Bull Put Spread

A Bull Put Spread is a type of vertical spread strategy used in options trading

## Bull Call Spread

A Bull Call Spread is an options trading strategy that's used when a trader believes the price of an underlying asset will go up, but not significantly.

## Short Put

Short Put strategy is employed in a bullish or neutral market outlook, where the investor believes that the underlying asset's price will remain stable or rise.

## Long Call

Long Call option' is the most basic & simplest strategy. It is recommended or implemented when we expect the underlying asset to show significant upside move.