Calculate maximum profit, maximum loss and expiration breakeven for a bear put debit spread using its two strikes and net debit.
Maximum loss
Maximum loss generally equals the debit when the underlying finishes at or above the long-put strike and both puts expire worthless. Include contract quantity and transaction costs.
Maximum profit
Maximum profit is the distance between strikes minus the debit. At expiration it is reached at or below the short strike, subject to exercise, assignment and settlement mechanics.
Breakeven
Subtract the net debit per share from the long-put strike. Before expiration there is no fixed breakeven because time value and implied volatility influence the closing value.
Reward versus probability
A large maximum return does not prove that the trade is attractive. Compare target probability, liquidity, required move and time available alongside the payoff ratio.
A practical example
A 105/95 put spread costs $3.60. Maximum loss is $360, maximum profit is $640 and expiration breakeven is $101.40.
This simplified example focuses on the spread at a specific moment and expiration outcome. Live option prices also reflect the underlying price, time decay, rates, dividends, liquidity and transaction costs. Greeks are theoretical estimates, not guarantees.
Frequently asked questions
Where is maximum profit reached?
At expiration, generally at or below the short-put strike.
Is breakeven fixed before expiration?
No. Remaining extrinsic value changes the mark.
Do fees change the calculation?
Yes. They reduce profit and worsen the effective breakeven.
Continue the Bear Put Spreads cluster
Explore related guides: Bear Put Spread Example With Full Payoff Scenarios · Bear Put Spread vs Bear Call Spread · When to Close a Bear Put Spread. For a structured sequence, use the free Level 10 – Bear Put Spread course.
Options involve risk and are not suitable for every investor. This material is educational and is not investment, tax or legal advice. Greeks are theoretical estimates, and contract terms and broker requirements can vary.