Credit Spreads · Reinis Fischer · · 5 min read

Bull Put Spread Strategy: A Complete Beginner's Guide to Selling Credit Spreads for Income

If I could only use one options strategy in a $10,000-$20,000 portfolio, it would probably be the bull put spread.

That's a bold statement, especially considering how much attention covered calls and cash-secured puts receive in the options income community.

Don't get me wrong -I use both covered calls and cash-secured puts in my own portfolio. However, when it comes to generating recurring income while keeping capital requirements manageable, I keep coming back to bull put spreads.

Over the past few years, bull put spreads have become one of the foundations of my options trading approach. They've allowed me to generate premium income from companies such as NVIDIA (NVDA), Netflix (NFLX), and others without tying up large amounts of capital.

This article explains why.

What Is a Bull Put Spread?

A bull put spread is a bullish options strategy where you:

  • Sell a put option
  • Buy a lower strike put option
  • Collect a net credit

Your goal is simple: You want the stock to remain above your short strike price through expiration. If it does, both options expire worthless and you keep the premium collected.

Because you purchase a lower strike put as protection, risk is defined from the moment the trade is entered.

For this reason, bull put spreads are often referred to as:

  • Bull Put Spreads
  • Bull Put Credit Spreads
  • Put Credit Spreads

These terms generally describe the same strategy.

Why I Started Using Bull Put Spreads

Like many investors, I originally focused on covered calls and cash-secured puts. The problem was capital.

When working with a smaller account, cash-secured puts can consume a surprising amount of buying power.

Take a stock like NVIDIA. Selling a single cash-secured put may require tens of thousands of dollars in available capital.

For larger portfolios, that's manageable. For smaller portfolios, it can make diversification difficult.

Bull put spreads solve that problem. Instead of securing the entire put with cash, risk becomes defined by the width of the spread.

This dramatically reduces capital requirements while maintaining the ability to collect premium.

Why I Prefer Bull Put Spreads Over Cash-Secured Puts

This may be controversial among Wheel Strategy enthusiasts, but for many smaller accounts, I believe bull put spreads are often the better tool.

Capital Efficiency

This is the biggest advantage. A cash-secured put requires enough cash to purchase 100 shares if assigned. A bull put spread requires only the maximum risk of the spread. The difference can be substantial.

Better Diversification

If all your capital is tied up in one or two cash-secured puts, diversification becomes difficult. Bull put spreads allow me to spread risk across multiple positions. Rather than relying on a single company, I can build exposure to several.

Defined Risk

One of the biggest dangers of selling naked puts is that losses can become much larger than expected during severe market declines. Bull put spreads remove much of that uncertainty. Before entering the trade, I know exactly how much I can lose.

The One Advantage Cash-Secured Puts Have

There is one area where cash-secured puts clearly win. Assignment.

Many investors want to own shares. Getting assigned stock can become the first step in a Wheel Strategy, eventually leading to covered call income. That flexibility is valuable.

It's one reason I continue using cash-secured puts alongside bull put spreads.

Why Bull Put Spreads Work Well for Income Investors

Bull put spreads don't require explosive stock moves. You don't need to predict the next NVIDIA. You simply need the stock to avoid a large decline. That's a much easier prediction to make.

Bull put spreads can be sold on:

  • Individual stocks
  • ETFs
  • Indexes

They can be structured using:

  • Daily expirations
  • Weekly expirations
  • Monthly expirations
  • 30-45 day expirations

This flexibility makes them useful in many market environments.

A Real Example From My Portfolio

At the time of writing, one of my current positions involves NVIDIA.

The trade:

  • Sell NVDA 205 Put
  • Buy NVDA 195 Put
  • One week until expiration

Premium collected:

Approximately $0.36 per share, or $36 per contract. The short strike was selected with a delta below 0.10. This is an important detail. Many beginners focus on premium. I focus on probability. 

Could I collect more premium by selling closer to the money? Absolutely. Would that increase risk? Absolutely.

Over time, I've found that consistency often matters more than maximizing individual trade returns.

Weekly vs Monthly Bull Put Spreads

One of the most common questions traders ask is whether they should sell weekly or monthly spreads.

The answer is: it depends.

Weekly spreads offer:

  • Faster premium collection
  • More frequent opportunities
  • More active management

Monthly spreads offer:

  • More time for positions to recover
  • Fewer adjustment decisions
  • Often better risk-adjusted returns

Many options traders prefer the 30-45 day window. Personally, I use both approaches depending on market conditions.

What About Index Options?

Many premium sellers focus almost exclusively on index options such as SPX. I understand the appeal. Indexes offer excellent liquidity and diversification.

However, one of my preferred risk-management techniques is maintaining the possibility of owning the underlying asset if necessary. This naturally aligns with stocks and ETFs.

If a position becomes challenged, I may eventually decide to own shares and transition into covered calls. That process works naturally with stocks.

It doesn't work nearly as well with cash-settled index products. For this reason, I generally prefer stocks and ETFs.

Risk Management Matters More Than Premium

One of the biggest mistakes new options traders make is chasing premium. Higher premium usually means higher risk.

The goal is not maximizing income on a single trade. The goal is staying in the game long enough to generate income consistently.

Some principles I follow:

Focus on Quality Companies

Trade businesses you understand.

Avoid Excessive Leverage

Leverage amplifies mistakes.

Diversify Positions

Don't let one trade determine the outcome of the portfolio.

Have a Management Plan

Know in advance:

  • When you'll roll
  • When you'll close
  • When you'll accept a loss

Bull Put Spreads, Bear Call Spreads, and Other Credit Spreads

Bull put spreads are only one type of credit spread. The bearish equivalent is the bear call spread.

A bear call spread:

  • Sells a call
  • Buys a higher strike call
  • Collects a credit

The mechanics are very similar. The difference is directional bias. Bull put spreads are bullish. Bear call spreads are bearish.

Together they form the two primary credit spread strategies used by income-focused options traders.

Common Mistakes Beginners Make

  • Selling spreads too close to the money
  • Chasing high premium
  • Using excessive leverage
  • Ignoring position sizing
  • Trading earnings without a plan
  • Failing to manage challenged positions

I've made several of these mistakes myself over the years. Learning to avoid them has probably contributed more to my results than finding better trade entries.

Final Thoughts

There are many ways to generate income with options. Covered calls work. Cash-secured puts work. The Wheel Strategy works.

But if you're building a smaller portfolio and looking for a balance between income generation, capital efficiency, and risk management, bull put spreads deserve serious consideration.

They have become one of the most important tools in my own portfolio. Not because they generate the highest returns.

But because they allow me to pursue consistent income while keeping risk defined and capital available for other opportunities.