Bull Put Spread is a credit spread that profits if price stays above a strike. You receive premium upfront and cap your risk.
A Bull Put Spread involves:
Selling a higher strike put (collect premium)
Buying a lower strike put (limit risk)
You receive a net credit. Maximum profit is the credit if price stays above the higher strike. Maximum loss is capped if price falls below the lower strike.
Why "Bull"? You profit if price stays flat or rises (above the higher strike).
Why "Put Spread"? You're selling and buying puts with different strikes.
Setup:
Sell: 1 ETH $1,800 put for $50
Buy: 1 ETH $1,700 put for $20
Net Credit: $30 (received upfront)
What happens:
You receive $30 immediately
If ETH stays above $1,800: both puts expire worthless → keep $30
If ETH falls below $1,700: maximum loss = $100 spread - $30 credit = $70
Break-even: $1,770 ($1,800 - $30 credit)
Neutral to bullish outlook
Expect price to stay flat or rise
Want to collect premium
Accept limited downside risk
Income generation
Generate yield on capital
Lower risk than selling naked puts
Defined maximum loss
Capital efficiency
Receive premium upfront
Lower capital requirement than buying options
Defined risk profile
Example Setup:
ETH current price: $2,000
Sell: 10 ETH $1,800 puts (30 days) for $50 each = $500
Buy: 10 ETH $1,700 puts (30 days) for $20 each = $200
Net credit: $300
Maximum profit: $300 (if ETH > $1,800 at expiration)
Maximum loss: $1,000 - $300 = $700 (if ETH < $1,700 at expiration)
Break-even: $1,770
Scenario 1: ETH at $2,200 (rises 10%)
Both puts expire worthless
Keep: $300 credit
ROI: Infinite (no capital deployed, just collateral)
Annualized: ~36% if repeated monthly
Scenario 2: ETH at $1,900 (drops 5%)
Both puts expire worthless
Keep: $300 credit
Profit: $300
Scenario 3: ETH at $1,800 (drops 10%)
Higher strike put at-the-money (no intrinsic value)
Lower strike put expires worthless
Keep: $300 credit
Profit: $300
Scenario 4: ETH at $1,750 (drops 12.5%)
Higher strike put: ($1,800 - $1,750) × 10 = $500 loss
Lower strike put: ($1,700 - $1,750) × 10 = $0 (expires worthless)
Net: $500 loss - $300 credit = $200 loss
Still profitable due to credit received
Scenario 5: ETH at $1,700 (drops 15%)
Higher strike put: ($1,800 - $1,700) × 10 = $1,000 loss
Lower strike put: At strike, no intrinsic value
Net: $1,000 loss - $300 credit = $700 loss
Break-even point
Scenario 6: ETH at $1,500 (drops 25%)
Higher strike put: ($1,800 - $1,500) × 10 = $3,000 loss
Lower strike put: ($1,700 - $1,500) × 10 = $2,000 profit
Net: $3,000 loss - $2,000 profit - $300 credit = $700 loss
Maximum loss capped at $700
Maximum loss
Capped at spread width minus credit received
Example: $100 spread - $30 credit = $70 max loss per contract
Defined risk profile
Assignment risk
If exercised, you must fulfill the obligation
Requires collateral (USDm equal to strike × amount)
Lower strike put limits maximum loss
Time decay
Works in your favor (you're net short options)
Value erodes as expiration approaches
Best if price stays above higher strike
Break-even
Must stay above break-even to profit
Break-even = higher strike - net credit
Example: $1,800 - $30 = $1,770
Capital requirement
Must lock collateral (USDm) equal to maximum loss
Example: $700 collateral for $300 credit
Capital efficiency: 43% return on collateral if successful
vs. Selling Naked Puts
Bull Put Spread: Defined risk, capped loss
Naked Put: Unlimited risk if price crashes
Bull Put Spread is safer
vs. Buying Calls
Bull Put Spread: Receive premium, profit if price stays flat or rises
Buying Calls: Pay premium, need price to rise significantly
Bull Put Spread better for neutral-to-bullish outlooks
vs. Bull Call Spread
Bull Put Spread: Credit spread (receive premium)
Bull Call Spread: Debit spread (pay premium)
Bull Put Spread generates income upfront
Sub-10ms execution
Instant premium calculation
Real-time pricing updates
No execution delays
Transparent pricing
On-chain Black-Scholes calculation
Chainlink price feeds
No hidden fees
Ultra-low gas costs
<$0.005 per transaction
Efficient spread execution
Higher net returns
Real-time position management
Monitor credit received
Track break-even levels
Exercise lower strike put if needed
Strike selection
Higher strike: Choose support level you expect to hold
Lower strike: Choose level that caps acceptable loss
Wider spread = more credit but more risk
Duration
Shorter (7-14 days): Faster time decay, higher credit per day
Longer (30-90 days): More time for price to stay above strike, lower credit per day
Market conditions
Best in neutral-to-bullish markets
Avoid in high volatility (premiums may not justify risk)
Monitor support levels
Risk management
Never risk more than you can afford to lose
Maximum loss is defined but can be significant
Consider closing early if price approaches break-even
Bull Put Spread lets you collect premium with defined risk. You profit if price stays above the higher strike, with loss capped by the lower strike.
Key takeaways:
Receive premium upfront
Profit if price stays flat or rises
Defined maximum loss
Capital-efficient income strategy
Perfect for: Traders with a neutral-to-bullish outlook who want to generate income while limiting downside risk.
Ready to collect premium with defined risk? Bull Put Spread on MegaFi offers real-time pricing, instant execution, and transparent settlement on MegaETH.
Trade smart. Collect premium. Limit risk.
Disclaimer: All examples and scenarios in this article are for educational purposes only. Options trading involves significant risk. Past performance does not guarantee future results. Always conduct your own research and never risk more than you can afford to lose. Premiums, payoffs, and outcomes are estimates based on current market conditions and may vary significantly in practice.