Bull Put Spread

If you are feeling generally positive about a stock, bull spreads offer a low risk, low return strategy. One way to create a bull put spread is by using puts at or near the current market price.

Example: If you had a bullish short term feeling about Wal Mart (WMT) while it was trading at $54.14 you might create a bull put spread by selling the 55 Put at $2.55 and buying the 50 Put for $0.85.

The maximum profit would be $170 ((2.55 – 0.85) x 100), while the most you stand to lose is $330   ((55 – 50 – 1.7) x 100).

Using ShareChart’s Option Strategies for Bull Put Spreads the entire transaction can be seen clearly. Go to Derivatives < Option Strategies and select Bull put Spread from the ‘Strategy’ Drop Down Box. Enter in all relevant parameters and click ‘Update’ to view the chart.