Debit spreads
Bear put spread
Buy an at-the-money put, sell a further out-of-the-money put.
Index goes downOpens for a debitNew to optionsLoss capped
How it works
The mirror of the bull call spread, for a fall. The sold put subsidises the bought one and caps the gain below its strike.
What it costs you when you are wrong
The whole debit is at risk and is lost if the index holds up or drifts. Falls are often fast but short, so exiting on time matters more here than in most structures.
The position
- 1Buy the put at the money
- 2Sell the put 4 strikes out of the money
- Enter
- 6 trading days before expiry
- Exit
- hold to expiry
- Legs
- 2
Test it yourself
This runs against real historical market data. Nothing is uploaded, nothing is stored, and the result is not a prediction — it is what this rule would have done, on that index, in that year, with the costs shown.