Bull Put Spread Strategy: How I Target 5–10% Monthly From SPX Options

What Is a Bull Put Spread?

If you’re looking for a reliable way to earn income from the markets—without risking your shirt—the bull put spread deserves your attention.

I’ve used this strategy for decades. In fact, it’s the backbone of our Monthly Trend service, where traders receive just one SPX signal per month—each one handpicked, risk-defined, and fully automated. We don’t throw darts. We aim for consistency.

A bull put spread is a type of credit spread where you sell one put option and simultaneously buy another put option at a lower strike price. Both options expire on the same day. You collect a credit upfront—and if the market stays above the short strike, you keep the premium.

Why I Like Bull Put Spreads (Especially on SPX)

Most people think options are dangerous. And yes, trading naked puts or chasing meme trades can wipe out your account. But bull put spreads are defined-risk—meaning I always know the worst-case scenario before I enter.

This strategy is perfect for risk-averse professionals—doctors, lawyers, retirees—anyone who wants monthly income with risk controls in place.

When used on SPX, the cash-settled index, it becomes incredibly capital-efficient. That’s why we use it in Monthly Trend—a service that delivers just 12 carefully-timed trades per year, each optimized to generate income from premium decay while keeping risk fixed and transparent.

Components of a Bull Put Spread

• Short Put: The option I sell—usually slightly out-of-the-money (OTM). This is where the premium comes from.
• Long Put: Bought at a lower strike. It protects me from large downside moves.
• Credit Received: The net premium I collect when opening the spread. This is my potential profit.
• Defined Risk: My maximum loss is limited to the width of the spread minus the credit received.

Example: Sell SPX 5050 Put, Buy SPX 5040 Put (Same Expiry)
Spread width = $10
Net credit = $5.00 → Max profit: $500 per spread
Max risk = $10.00 – $5.00 = $500 per spread
Initial risk-to-reward: 1:1
Stop-loss triggered at 50% max loss → -$250
Realistic risk-to-reward: 1:2

How a Bull Put Spread Works

If SPX closes above 5050, you keep the full $500 credit.
If it drops toward 5045, there’s unrealized loss, but manageable.
If SPX closes below 5040, you hit max loss of $500.
But our stop-loss is set to $250, so we never see the full loss.

When to Use a Bull Put Spread

This strategy does not profit in sharp, bearish markets. However, with only one trade per month, it typically avoids losses over the course of a year. I usually look to sell bull put spreads when:

• The market has pulled back but shows signs of stabilizing or recovering.
• Implied volatility is elevated (we’re selling rich premium).
• The VIX is between 17 and 24.
• SPX is near a technical support level or coming off oversold RSI readings.

Profit and Loss Potential

A $10-wide bull put spread with a $5.00 credit means:

• Max Profit: $500
• Max Loss: $500
• Break-even Point: 5050 – 5.00 = 5045

With a 50% stop-loss, typical risk is $250 and reward is $500, giving an effective 1:2 risk-to-reward profile.

Bull Put Spread vs Other Strategies

Bull Put Spread vs Bull Call Spread

Bull puts sell premium and benefit from time decay; bull calls buy premium and require price movement. I prefer bull puts for monthly income on SPX.

Bull Put Spread vs Bear Put Spread

Bull puts are bullish credit spreads; bear puts are bearish debit spreads. Use bear puts only with strong directional conviction.

Bull Put Spread vs Iron Condor

Iron condors are neutral strategies with more legs. Bull put spreads are simpler and cleaner to manage for monthly income.

How to Set Up a Bull Put Spread

1. Choose Strike Prices: Target 15–20 Delta on the short put and set long put $10 lower.
2. Select Expiration: Use monthly options with 25–35 days to expiration.
3. Check Market Conditions: Avoid major economic events. Look for elevated IV and technical support.
4. Place the Spread: Use a single limit order to sell one put and buy another.

Managing and Exiting a Bull Put Spread

• Let It Expire: If far above the short strike, allow it to expire worthless.
• Take Profit Early: Close trades at 80–90% of max profit.
• Cut Losses: Close at 50% of max loss to protect capital.
• Adjust if Necessary: Roll out or down only if it improves the risk profile.

Hedging and Adjustments

• Vertical Roll: Move the spread to a lower strike and later expiration.
• Add a Hedge Put: Buy an additional put for crash protection.
• Add Bear Call Spread: Offset losses by creating an iron condor when conditions warrant.

Common Mistakes to Avoid

• Using market orders and ignoring slippage.
• Selling too close to the money without managing risk.
• Trading without a stop-loss plan.
• Holding into expiration week without an edge.

FAQs on Bull Put Spreads

What’s the success rate of a bull put spread?
Historically 55–65% win rate with disciplined risk control.

Can I use bull put spreads in an IRA?
Yes, if your broker allows spread trading in retirement accounts.

What’s the best expiration?
Monthly options with 25–35 days to expiration.

What Delta do you target?
Short strikes with 5–10 Delta for higher win rate.

Can this be automated?
Yes, through our Monthly Trend service with Tradier or Interactive Brokers.