What is a 'Bear Spread'
A bear spread is an option strategy that will profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of options, where either puts or calls can be used. A trader buying a put bear spread would purchase a put with a higher strike price while simultaneously selling a put with a lower strike price. Likewise, a trader can sell a call with a higher strike price and buy a call with a lower strike price. The options will often have the same expiration date. A bear spread is sometimes called a bear vertical spread, and is in contrast to a bull vertical spread.
Bear spreads can also involve ratios, such as buying one put to sell two or more puts at a lower strike price than the first. Because it is a spread strategy that pays off when the underlying declines, it will lose if the market rises  however, the loss will be capped at the premium paid for the spread.
BREAKING DOWN 'Bear Spread'
A bear spread is also a trading strategy used by futures traders who intend to profit from the decline in commodity prices while limiting potentially damaging losses. In an options bear spread, the options position makes money if the underlying security goes down, and loses if the underlying security rises in price. A futures bear spread is created through the simultaneous purchase and sale of two of the same or closely related futures contracts. This is accomplished in the agricultural commodity markets by selling a future and offsetting it by purchasing a similar contract with an extended delivery date.
Bear Put Spread Example
Assume an investor is bearish on stock XYZ when it is trading at $50 per share and believes the stock price will decrease over the next week. The investor purchases 10 put options with a strike price of $55 and writes 10 put options with a strike price of $45, which expire the next week, for a combined total of $3,500. Therefore, the investor's maximum loss is the amount paid to implement the position, and the maximum profit is limited to the strike price of the long put less the strike price of the short put and the net premium paid. Assuming options have a contract size of 100, the maximum profit of the position is $6,500, or ($55 * 10 * 100)  ($45 * 10 * 100)  $3,500. In this bear put spread, the maximum profit is achieved if stock XYZ trades below the strike price of the short put, or $45. The breakeven point of a bear put spread is equivalent to the strike price of the long put option less the net premium paid.
Futures Bear Spread
Assume an investor is bearish on the Standard & Poor's 500 Index (S&P 500) when it traded at 2,000. The investor believes the S&P 500 will fall in the short term but rebound over the long term. Therefore, the investor creates a bear spread by selling short one S&P 500 futures contract expiring in six months for 1,995, and simultaneously purchases one S&P 500 futures contract expiring the next year for 1,997.

Bear Put Spread
A bear put spread is a bearish options strategy used to profit ... 
Buy A Spread
Buying a spread is an options strategy involving buying and selling ... 
Bull Put Spread
A bull put spread is an incomegenerating options strategy that ... 
Covered Bear
A covered bear is a trading strategy in which a short sale is ... 
Spread Option
A spread option is a derivative based on the value of the difference, ... 
Debit Spread
A debit spread is an option strategy involving the simultaneous ...

Trading
Vertical Bull and Bear Credit Spreads
This trading strategy is an excellent limitedrisk strategy that can be widely used. 
Trading
Which Vertical Option Spread Should You Use?
Knowing which option spread strategy to use in different market conditions can significantly improve your odds of success in options trading. 
Personal Finance
Tips for Answering Series 7 Options Questions
We'll show you how to ace the largest and most difficult section of the Series 7. 
Trading
Understanding Bull Spread Option Strategies
Bull spread option strategies, such as a bull call spread strategy, are hedging strategies for traders to take a bullish view while reducing risk. 
Trading
Option trading strategies: A guide for beginners
Options offer alternative strategies for investors to profit from trading underlying securities. Learn about the four basic option strategies for beginners. 
Trading
4 Popular Options Strategies for 2016
Learn how long straddles, long strangles and vertical debit spreads can help you profit from the volatility that stock analysts expect for 2016. 
Trading
Strategies for Trading Volatility With Options (NFLX)
These five strategies are used by traders to capitalize on stocks or securities that exhibit high volatility.

How do you use put options to profit from a bear market?
Learn how traders use put options in their trading strategies to remain profitable, even in a bear market. Everyday investors ... Read Answer >> 
When Is a Put Option Considered to Be 'in the Money?'
Learn about put options, how these financial derivatives work and when put options are considered to be in the money related ... Read Answer >> 
What is index option trading and how does it work?
Learn about stock index options, including differences between single stock options and index options, and understand different ... Read Answer >>