How bear spreads work
Put debit vs call credit: max loss, max profit, breakeven.
Two books
Put debit (a bear put spread): buy the higher-strike put, sell a lower-strike put, same expiry. The net debit is the most you can lose. Call credit (a bear call spread): sell the lower-strike call, buy a higher-strike call. You collect a net credit; defined risk is width minus that credit.
With the same two strikes, both have the same payoff at expiry: full profit if the stock closes at or below the short (lower) strike, full loss at or above the long (higher) strike. A gap up hurts both the same way, and the loss is capped at the max loss either way.
What actually differs:
- Cash: the put debit is paid up front. The call credit holds width minus credit as collateral; the credit is not spare cash to invest.
- Early assignment: U.S. stock options can be exercised before expiry, mostly when a short leg is deep in the money. That is the short call on OTM and FAR call credits, especially before an ex-dividend date, and the short put on DEEP and MID put debits. The long leg still caps the loss, but you may have to manage stock.
- Fill quality: the two books quote differently. The fill gap on each row shows how far the ask sits from the mid.
The three numbers
- Put debit: max loss = debit; max profit = width − debit; breakeven = long (higher) strike − debit
- Call credit: max profit = credit; max loss = width − credit; breakeven = short (lower) strike + credit
All per share; one contract is 100 shares. At expiry: at or below the short strike, the spread pays its cap. Between the strikes, the payoff falls as the stock rises. At or above the long strike, the max loss is taken.
Hypothetical, not a live quote: stock at $100, 180 days left. Buy the $110 put, sell the $105 put for a $3.40 debit: max loss $340, max profit $160, breakeven $106.60. Or sell the $105 call, buy the $110 call for a $1.60 credit: max profit $160, max loss $340, the same $106.60 breakeven. The short strike is already 5% above the price, so the stock only has to stay below it, not fall.
Versus a long put
Selling the lower strike cuts the cost versus the higher put alone: smaller max loss, but nothing more below the short strike. Put skew helps here: lower-strike puts usually trade at a higher implied volatility, so the put you sell is the richer one and the vertical costs less than an outright put. For an open-ended bet on a large drop, see Long Puts.
Protection or a view
Protection: a put debit spread on an index ETF or on a stock you own is a fixed-cost hedge. It pays only for the drop between the two strikes, so size it to the loss you want covered, not to the whole position.
A view: a bear spread on a single name is a bet that it stays below the short strike for months. Takeovers, short squeezes and earnings gaps can push a stock through both strikes overnight. That applies to every bear spread on this board, and the loss stops at the max loss. Check the next earnings date on the row.
Reading the board
Strike sleeves, the base rate, RANK, HIT and TYP, defined.
What the board screens
Every optionable stock and ETF we track, 3–13 months out, put debit and call credit, in one rank. Cushion is how far the short strike sits above today’s price. Positive means the stock can rise that far and still pay in full; negative means it has to fall.
- Deep: short strike 12–20% above spot
- Mid: 6–12% above
- Near: 1–6% above
- ATM: 1% above to 3% below
- OTM: 3–10% below. Needs a drop
- Far: 10–25% below. Needs a big drop
Steadier and Octane (high-octane) describe the stock’s past price path. Labels, not a recommendation to sell.
The base rate
Stocks drift up, so a bear spread needs more cushion for the same odds. On 50,155 monthly entries across 379 tickers (2010–2026), a hold of about 250 sessions with the short strike 5% on the safe side finished there 65.0% of the time for a bull spread and 50.0% for a bear spread.
| Cushion | Bull spread safe | Bear spread safe |
|---|---|---|
| 0% | 57.8% | 42.3% |
| 5% | 65.0% | 50.0% |
| 10% | 71.3% | 57.4% |
| 15% | 76.4% | 64.3% |
The sample is today’s surviving tickers. Names that went to zero or were delisted are missing, which flatters the bull side slightly.
Columns
- Cost: put rows show ASK debit (higher put ask − lower put bid) and MID. Call rows show CREDIT now and defined risk (width − credit). Neither is a fill.
- Cushion: short strike above today’s price. Not protection, not a probability of profit.
- APY: ASK and MID max return × 365 / days left. RANK uses the ASK run-rate; put and call rows compete in one sort. Not a yield.
- Breakeven: put, long strike − debit. Call, short strike + credit.
- Geometry: ASK / WIDTH is the share of the capped payoff paid up front. FILL GAP is ASK minus MID as a share of width. INTRINSIC / TIME splits a put debit at today’s price.
RANK, HIT and TYP
RANK is a bounded bear hold score. It adds up calendar APY (capped at 100%), quote fillability, cushion versus the stock’s typical 6-month rally (the largest weight), the bear HIT rate, the past median move down, and a penalty for a fat right tail of rallies. Smaller tilts: a bonus for a weak trend (negative Sharpe) and a low quality score; White Arrow direction down +0.3, up −0.3; HMM regime BEAR or CRISIS +0.25, BULL −0.25; and −0.5 when a seller-exhaustion or EXH-buy release signals bounce risk. Not a trade rank, not advice.
The trend tilts are small on purpose. In our data the weakest 12-month momentum fifth finished a 5% bear hold on the safe side 53.7% of the time, against 46–50% for the other four.
HIT is the share of this ticker’s completed same-length stock holds whose expiry close finished at or below this ticket’s relative short strike; blank under 30 windows. TYP is the median stock return over those holds, clipped at ±40% for display; negative is the good side here. Both are stock-path facts, not option P&L.
Open a row for more: P90 PATH is the 90th-percentile stock return over those holds (the rally tail), the breach share, the median rally inside a hold, the median time spent above the short, and the stock’s typical 6-month rally with how many times the cushion covers it. Not a forecast.
Shorter DTE inflates APY, so RANK caps it at 100% for scoring. The list keeps each ticker’s best row; open a row or search a ticker to see its other strikes and expirations.
Exhaustion chips
Pro chips filter names on nightly EXH-BUY / seller-zone flags. For a bear spread they are a warning, not a trigger: a release means sellers may be spent, and RANK takes 0.5 off. The public /track-record scores seller-exhaustion RELEASE over 21 sessions. After a release, at 360d the typical liquid name was median +13.2%, P(up) 63%, vs SPY +1.1%. 65% printed −12% on the path. Stock path, not option P&L. Not a forecast. Daily chips, not live I·EXH.
What the research says
Put skew is persistent: lower-strike puts usually carry higher implied volatility, which is why selling the lower put makes a bear vertical cheaper than an outright put. Trend and quality matter, but modestly: weak past returns tend to persist (Moskowitz, Ooi and Pedersen, time-series momentum, 2012), and low-quality companies have tended to lag high-quality ones (Asness, Frazzini and Pedersen, quality minus junk). Our own base rates say these edges are small next to the market’s upward drift, so RANK gives them small weights.
Research examples from market quotes, not fills. No direction forecast. LOPJLB does not place these trades and gives no personalized investment advice.