bear put spreads

Bear Put Spreads Option Strategy

Bear put option strategy is employed when the trader think the price of the underlying asset will go down moderately in the near term. In this strategy, the trader buys an in-the-money-put-option of higher strike price and sell an out-of-money-put option of lower strike price of the same underlying security with the same expiration date. By using this strategy the options trader reduces the cost of establishing the bearish position. By shorting the out-of-the-money put, the options trader reduces the cost of establishing the bearish position but forgoes the chance of making a large profi...
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