This Bull Put can be used as a credit entry substitute for buying an At-the-Money Long Call.


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Strategy: Bull Put , (ATM strike to 1 strike up)

a.k.a. Bull Put Spread, Bull Put Vertical

Bull Put Spread Option Graph

The Outlook: Very bullish. The stock must rise just to break even. The stock must rise more to show a gain.

The Trade: buy put ATM and sell put ITM.

Gains when: stock rises over short put strike - initial credit

Maximum Gain: initial credit.

Loses when: stock falls, does not rise, or does not rise enough.

Maximum Loss : limited to difference in strike prices - initial credit.

Breakeven Calculation: Short Put strike - initial credit.

Advantages compared to stock: limited risk, less capital needed, greater leverage.

Disadvantages compared to stock: gains are limited to the upside if stock rises more than the sold strike, no dividends.

Volatility: after entry, increasing implied volatility is positive if the stock falls, but negative if the stock rises.

Time: after entry, the passage of time is positive if the stock rises, but negative if the stock falls.

Margin Requirement: difference in strike prices x the number of shares represented.

Variations: see the Vertical Spread Strategies page and the All Bull Put credit spread graphs page.

Synthetic Equivalent: Long Stock plus Long Put plus Short Call. (A "collar".)


  • This Bull Put can be used if you are very bullish on a stock, but want to reduce the cost of entry compared to just buying an ATM Long Call. This is especially true if the options have a higher-than normal IV. Just buying a long call puts you at a disadvantage in terms of the higher price caused by the higher IV. If you use the Bull Put, you buy a high IV put but also sell a high IV put, and level the playing field.
  • The gains are limited to the upside, so you don't want to be "too" bullish.


  • Since this is a very bullish position, the trader is expecting the stock to rise. If the stock falls instead, the trader would be wise to cut his losses short. If the stock falls below the long strike and the time to expiration drops to just a couple weeks, you can see from the option graph that the loss will be less than the maximum, and it is probably best to take it. Just sitting and waiting could likely result in the maximum loss.
  • If the stock rises most of the way to the sold strike, the trader should stick with the position. As the option graph shows, just the passage of time is a benefit at any stock price near the sold strike.
  • If the stock falls below the long strike and you do not trade out of the position before expiration, it is possible to receive an automatic exercise on the long put, so you will sell the stock short, and be assigned on the short put, so you will buy the stock. See the Rules, Tips, & Techniques page for more.


  • It is not usually recommended to adjust one part of a Bull Put. If you take a trading profit on the short puts when the stock rises for instance, you are actually increasing your maximum risk. You might think you will sell the puts again the next time the stock falls, but what if it doesn't?
  • It is possible to roll the entire bull put to lower strike prices if the stock drops, but that really amounts to closing one trade at a loss and opening another trade in hopes of a gain. Plus, the stock has not behaved bullishly yet you are taking a second bullish position.
  • If the stock is over the sold put strike with expiration near and you have made 80% or so of the total possible on the short puts, you can roll everything out to the next month, and higher strike prices, if you are still bullish on the stock.

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