A Put Spread (or Vertical Put Spread) is a bearish options strategy that involves buying one put option and selling another put option with a lower strike price and the same expiration date.
It allows traders to profit from moderate downward moves while limiting potential losses.
How It Works
On Kyan, you can construct this position using:
1× Long Put (higher strike)
1× Short Put (lower strike)
The short put helps reduce the overall premium cost of buying the higher-strike put, while also capping potential profit.
Profit and Loss Profile
Maximum Profit: Difference between strike prices minus the net premium paid.
Maximum Loss: Limited to the net premium paid.
Breakeven: Higher strike minus the net premium paid.
Why Traders Use It
To benefit from moderate bearish moves with defined risk.
To hedge existing long positions without large capital outlay.
To express a directional view while maintaining capital efficiency.