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Bear Put Spread

You smell trouble. Maybe funding rates just flipped negative, maybe the weekly chart broke a key level, maybe you just have a gut feeling that this rally is cooked. You want downside exposure but a naked 94k put costs 4,600 and you are not confident enough to risk that much on a directional bet. The bear put spread lets you buy the put you want and sell a cheaper put below it to cut the cost. You cap your profit if BTC craters, but you also cap what you spend to find out.

Also called a debit put spread.

What You Do​

The SetupYou pay premium
Buy1 put at the higher strike (K2)
Sell1 put at the lower strike (K1), same expiry
Max Profit
Width - debit
Max Loss
Net debit
Breakeven
K2 - net debit
Margin
Net debit paid; short leg margined pre-expiry

How the P&L Works​

  1. Above K2. Both puts expire worthless. You lose the net debit. BTC stayed up and your bearish thesis was wrong.
  2. Between K1 and K2. The long put gains intrinsic value, the short put is still OTM. P&L improves dollar for dollar as spot drops.
  3. Below K1. Both puts are ITM. The short put offsets further gains. You hit the ceiling.

Worked Example: BTC 94k/87k Bear Put Spread​

BTC at 93,400. 14 DTE. IV at 58%.

Buy 94k put at 4,350. Sell 87k put at 1,200. Net debit: 3,150. Width: 7,000.

BTC at Expiry
Long $94k Put
Short $87k Put
P&L
$97,000
$0
$0
-$3,150
$94,000
$0
$0
-$3,150
$90,850
+$3,150
$0
$0
$89,000
+$5,000
$0
+$1,850
At or below $87,000
+$7,000+
offsets
+$3,850

Max profit: 3,850 (width 7k minus 3,150 debit). Max loss: 3,150. Risk/reward: 1.2:1. Breakeven: 90,850.

You need BTC below 90,850 at expiry. That is a 2.7% drop from entry. Not a crash call, just a bet that the bid gives way.

Explore the Payoff​

Spot at Expiry$100k
$70k$130k
Net Debit$4k
$1k$9k
BE $101k$0+$6k-$4k$70kK1 $95kK2 $105k$130kSpot Price at ExpiryP&L
Settlement
$100k
P&L
+1.0k
Max Loss
-$4k
Max Gain
+$6k

When to Use​

  • Moderately bearish. You expect a pullback, not a 40% crash. If you are calling for capitulation, just buy the put.
  • You want cheaper entry than a naked put. In the example, selling the 87k put cut the cost from 4,350 to 3,150, a 27% discount.
  • IV is high and you want to hedge some vega exposure. The short leg absorbs part of the vol crush if IV drops after your entry.
  • You want a defined max loss. You pay 3,150, that is the absolute worst case. No margin calls, no liquidation risk.
💡

A credit spread with 70% win rate sounds great until you do the math on the 30%. The bear put spread flips that dynamic: you lose small most of the time and win bigger when your thesis hits. Which profile matches your psychology matters more than which one has better expected value on paper.

Greeks at a Glance​

Greek
Sign
What It Means
Delta
-
Net negative. You profit when BTC drops. The magnitude is smaller than a naked put.
Gamma
+/-
Positive near K2 (delta accelerates into the drop), negative near K1 (gains decelerate).
Theta
+/-
Negative near K2 (time hurts you), flips positive near K1 (the short leg decays faster).
Vega
Low
Partially cancelled between legs. Some net long vega remains, but far less than a naked put.
Common Mistakes
The mistakeBuying bear put spreads as a "hedge" on your long BTC without doing the math on how much of the drop they actually cover.
The realityA $94k/$87k spread protects $7k of downside below $94k. If BTC drops from $93k to $75k, you are covered for $7k of that $18k move. Know the gap.
The mistakeOpening the trade right after a big red candle, when IV has already spiked. You are buying expensive puts and selling expensive puts, but the net debit is inflated.
The realitySpreads partially cancel vega, but "partially" is doing heavy lifting. If IV is already at 80% after a sell-off, your debit is fatter than it would be in a calm market. The drop you are betting on may already be priced in.
The mistakeSetting K1 (the lower strike) too close to spot because you want a cheaper spread. A $94k/$92k spread costs less but needs a precision drop to pay off.
The realityNarrow bear put spreads become binary bets. Either BTC threads the needle or you lose. If your thesis is "BTC drops 5-10%," your spread width should reflect that range, not minimize your entry cost.

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