What is the meaning of Bear Put Spread?

Bear Put Spread is an options strategy employed by traders to buy and sell Put options with same expiry date but different strike prices. The spread is attained when one buys put options at a particular strike price and sells an equal number of puts at a lower one. Thus, the profit is measured by calculating the difference between the above two strike prices after subtracting the net cost of options.

Profit=Long Put Strike Price-Short Put Strike Price-Charges of Options

The Put with the higher price is called ITM Put or in-the-money and the one with the lower price is called OTM Putor out-of-the-money.

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