The bull put spread option trading strategy is initiated when the options trader expects the price of the underlying asset will go up reasonably in the short term. The bull put spread options strategy is also called as the bull put credit spread as a credit is received upon executing the trade.
Bull Put Spread Formula
- Buy 1 OTM Put.
- Sell 1 ITM Put.
Bull put spreads can be executed by buying a lower striking out-of-the-money put option and selling a higher striking in-the-money put option on the same underlying stock with the same expiration date.