Bull Put Option Strategy

A bull put option strategy involves selling a put option at a higher strike price and buying a put option at a lower strike price on the same underlying asset with identical expiration dates. You receive a net cash credit upfront because the higher-strike put brings in more cash than the lower-strike put costs. You profit as long as the stock price remains above the higher strike price through expiration.

Your profit potential is capped at the net credit earned when you open the trade. The maximum potential loss is also strictly limited to the difference between the two strike prices minus the credit collected. Because the risk is defined in advance, this approach lets you collect income while protecting yourself from catastrophic downward moves in the stock.