Replies to post #12756 on Options Wonderland

[3xBuBu]

Bear Put Spread
Expecting a stock to go down and bringing in premium.
Mechanic is to Buy Higher Strike Put (HSP) and Sell Lower Strike Put (LSP) with a same OE
Risk = Debit = cost of Buying HSP - credit of Selling LSP
Reward = (HSP - LSP) - Debit
Break even = HSP + Debit

Example:
AAPL Apr08 180 P @ 11.20
AAPL Apr08 210 P @ 26.05
Risk = Debit = 11.20 - 26.05 = -14.85
Reward = (210 - 180) - 14.85 = 15.15
Break even = 210 - 14.85 = 195.15