Short Put Spread
Options strategy · Level 3 · Spreads & short options
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Sell a put and buy a lower-strike put as protection. A short put with a floor under the loss.
Where Tradecraft teaches it
Level 3 · Spreads & short options, in the lesson “Credit spreads: the core math”: Credit vs debit verticals, max profit, max loss, breakeven and buying power.
Related terms
- Short Call SpreadSell a call and buy a higher-strike call as protection.
- Buying-power reduction (BPR)Capital a broker sets aside to hold a position.
- Combo orderA single ticket for a multi-leg trade at one net limit price; all legs fill together or not at all.
- Credit spreadTwo-option position opened for net money received: sell the more valuable option, buy a cheaper one further out of the money as a hedge.
- Natural priceThe spread price you get by crossing every leg — buying at the ask and selling at the bid.
- Short strikeIn a spread, the strike of the option you sold: past it at expiration the position starts giving back its credit, so it is the level traders watch…