Bull Put Spread Strategy with Example

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Bull Put Spread Strategy with Nifty Example

The Bull Put Spread is a popular bullish options strategy used when you expect the market to stay above a certain level or move slightly upward.

It is a limited profit, limited loss strategy and works best in a range-bound to mildly bullish market.

It is also called a Credit Put Spread because you receive premium upfront.

What is a Bull Put Spread?

A Bull Put Spread involves:

  • 🔹 Selling a higher strike Put Option

  • 🔹 Buying a lower strike Put Option

  • 🔹 Same expiry date

This strategy benefits from:

  • ✔ Time decay (Theta)

  • ✔ Stable or rising markets

  • ✔ Defined risk

Example: Nifty February Expiry

Using the same strike structure concept (200-point difference) as your previous example:

  • Sell Nifty Feb 25500 PE @ ₹222

  • Buy Nifty Feb 25300 PE @ ₹50

Assume Nifty is trading near 25500.

Step 1: Net Premium Received (Credit)

Net Credit = 222 – 50
Net Credit = ₹172

This ₹172 is your maximum possible profit.

Maximum Profit

Maximum Profit = Net Premium Received

= ₹172 per lot

👉 This happens if Nifty expires at or above 25500.

Both puts expire worthless, and you keep the full premium.

Maximum Loss

Strike Difference = 25500 – 25300 = 200

Maximum Loss = Strike Difference – Net Credit
= 200 – 172
= ₹28 per lot

👉 This occurs if Nifty expires at or below 25300.

Loss is limited because you bought the 25300 PE for protection.

Break-even Point

Break-even = Higher Strike – Net Premium

= 25500 – 172
= 25328

If Nifty expires above 25328, the strategy remains profitable.

Expiry Scenarios

1️⃣ If Nifty closes above 25500

✔ Both puts expire worthless
✔ Profit = ₹172 (Max Profit)

2️⃣ If Nifty closes between 25300 and 25500

✔ Partial profit/loss
✔ Profit reduces gradually

3️⃣ If Nifty closes below 25300

✔ Maximum Loss = ₹28
✔ Loss is predefined and limited

Why Use Bull Put Spread?

✔ Market is bullish or sideways
✔ Strong support near 25300–25500
✔ Want limited risk strategy
✔ Want consistent premium income

This strategy is ideal when you believe Nifty will not break a strong support zone.

Strategy Summary Table

ComponentValue
Market View        Bullish / Range-bound
Sell Strike             25500 PE
Buy Strike             25300 PE
Net Credit              ₹172
Max Profit              ₹172
Max Loss               ₹28
Break-even                25328

Final Thoughts

The Bull Put Spread is the bullish counterpart of the Bear Call Spread.

  • Both are credit spreads

  • Both have limited risk & limited reward

  • Difference is market direction

If you expect support to hold, Bull Put Spread is a high-probability income strategy. 


#BullPutSpread #OptionsTradingIndia #NiftyOptions #OptionsStrategy #StockMarketIndia
#DerivativesTrading #PassiveIncomeStrategy

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