Put Spreads (Vertical)
Chapters in this video
What this video covers
- How a bear put spread buys the higher strike and sells the lower strike for a net debit, expressing a moderately bearish outlook
- How to calculate a bear put spread's maximum loss as the debit paid and maximum gain as spread width minus the debit
- How a bull put spread sells the higher strike and buys the lower strike for a net credit, expressing a moderately bullish outlook
- How to calculate a bull put spread's maximum gain as the credit received and maximum loss as spread width minus the credit
- Why both put spreads use the higher strike minus the net premium for breakeven, whether the premium is paid or received
- Why bear put and bull put spreads with the same strikes share the same breakeven
- How to identify which strike was bought or sold and avoid confusing the put-spread breakeven anchor with the lower-strike anchor used for call spreads
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