What is a 'Bear Spread'
A bear spread is an option strategy seeking maximum profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of options; puts or calls can be used. A higher strike price is purchased and a lower strike price is sold. The options should have the same expiration date.
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 goes down and loses if the underlying 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 ... 
Bull Put Spread
A type of options strategy that is used when the investor expects ... 
Bear Call Spread
A bear call spread is a bearish options strategy used to profit ... 
Bull Spread
A bull spread is a bullish options strategy using either two ... 
Vertical Spread
A vertical spread strategy uses purchases and sales of the same ... 
Strike Price
Strike price is the price at which the underlying asset of a ...

Trading
Bear Put Spreads: An Alternative to Short Selling
This strategy allows you to stop chasing losses when you're feeling bearish. 
Trading
What is a Bear Put Spread?
A bear put spread entails the purchase of a put option and the simultaneous sale of another put with the same expiration but a lower strike price. 
Trading
What is a Bear Call Spread?
A bear call spread is an option strategy that involves the sale of a call option, and the simultaneous purchase of a call option (on the same underlying asset) with the same expiration date but ... 
Trading
Vertical Bull and Bear Credit Spreads
This trading strategy is an excellent limitedrisk strategy that can be widely used. 
Trading
What Is A Bull Put Spread?
Investopedia explains: A bull put spread is a variation of the popular put writing strategy, in which an options investor writes a put on a stock to collect premium income and perhaps buy the ... 
Personal Finance
Tips for Answering Series 7 Options Questions
We'll show you how to ace the largest and most difficult section of this exam. 
Trading
Options Strategies for Your Portfolio to Make Money Regularly
Discover the optionwriting strategies that can deliver consistent income, including the use of put options instead of limit orders, and maximizing premiums. 
Trading
The Butterfly Spread
A butterfly spread is a neutral options strategy with both limited risk and limited profit potential. The strategy involves four options contracts with the same expiration month but with three ... 
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
The Basics of Options Profitability
Learn the various ways traders make money with options, and how it works.

What is the difference between in the money and out of the money?
Learn how the difference between in the money and out of the money options is determined by the relationship between strike ... 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 >> 
How do I change my strike price once the trade has been placed already?
Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >>