The Bull Put Spread

Here is a different way to be bullish. Instead of paying money up front and hoping RELIANCE climbs enough to pay you back, what if you got paid first, and simply kept the cash as long as the stock did not fall? That is the appeal of a credit strategy. You collect premium on day one, and time works for you instead of against you. The bull put spread is the first credit strategy in this course, and it is the mirror image of the bull call spread you just learned. Same bullish view, opposite construction. You receive money rather than spend it.

What a bull put spread is

A bull put spread has two legs, both puts, on the same expiry.

You sell the 1320 put, the leg that earns its keep as long as RELIANCE stays up. Selling a put means you are paid premium today in exchange for the obligation to buy RELIANCE at 1320 if it falls there and you are assigned. Then you buy the 1280 put at a lower strike as protection. That bought put costs some of your premium back, but it is the safety leg that caps your loss and turns this into a defined-risk trade.

The premium you take in for the sold put is larger than what you pay for the bought put, so you walk away with a net credit of about Rs 8,210 for one lot. That credit lands in your account immediately, and it is yours to keep if RELIANCE simply does not fall.

The three numbers

Here is what the strategy builder reports for the RELIANCE bull put spread, spot near 1318, expiry 28 July 2026.

Read them carefully, because a credit trade behaves differently from the debit spread you just met.

• The maximum profit is Rs 8,210, which is exactly the net credit you collected. You keep all of it if RELIANCE closes at or above 1320 at expiry, where both puts expire worthless and nobody assigns you. This is the flat ceiling on the right of the chart, and notice you reach it just by the stock staying put.
• The breakeven is 1304. RELIANCE can fall a little, all the way down to 1304, and you still break even, because the credit you banked cushions the first part of any drop. Above 1304 you keep at least some profit.
• The maximum loss is Rs 11,790, suffered if RELIANCE closes at or below 1280. There the sold put is fully against you but the bought 1280 put caps the damage. This is the flat floor on the left.

Reading the chart

Walk the solid white expiry line from right to left this time, since this is a trade that wants the stock high.

On the right, above 1320, both puts are worthless and you sit on your maximum profit of Rs 8,210, the full credit, as a flat ceiling. As RELIANCE slips below 1320 the sold put starts costing you, so your profit shrinks. At the breakeven of 1304, marked by the amber dot, the line crosses zero. Below 1304 you are in the red loss zone, the loss deepening as RELIANCE falls, until at 1280 the bought put kicks in and flattens the line onto its floor of Rs 11,790. Below 1280 you lose no more, because the protection leg is doing its job.

The dotted cyan line is the value today, the T+0 curve, and the amber dotted vertical marks spot 1320. The pleasant feature of a credit trade is that the dotted line drifts upward toward the solid ceiling as time passes, because every day of decay that goes by with RELIANCE still up is a day of premium you get to keep.

Three ways expiry can play out

Walking through the endings makes the credit structure click. There are three places RELIANCE can finish relative to your two strikes on 28 July 2026.

• RELIANCE closes at or above 1320, say at 1330. Both the 1320 put and the 1280 put expire worthless. Nobody assigns you, you owe nothing, and you keep the entire Rs 8,210 credit you banked on day one. This is your maximum profit, and you earned it simply because the stock did not fall. This is the bet working perfectly.
• RELIANCE closes between 1320 and 1280, say at 1304. The sold 1320 put now has intrinsic value working against you, while the bought 1280 put is still worthless. The loss on the sold put eats into your credit. At 1304 it eats exactly all of it, which is why 1304 is your breakeven. Above 1304 you keep part of the credit, below it you start to lose.
• RELIANCE closes at or below 1280, say at 1260. Both puts now have intrinsic value. The sold 1320 put costs you 60 points, but the bought 1280 put earns back 40 points, leaving a net 40 points against you, the full strike width worth Rs 20,000. Subtract the Rs 8,210 credit you kept and your loss is capped at Rs 11,790, the maximum loss. Below 1280 the result does not get worse, because the protection leg matches every further point.

The bought 1280 put is the hero of that third scenario. Without it, a deep fall in RELIANCE would keep costing you with no floor at all.

Credit against debit: the same bullish view, two shapes

You now know two bullish, defined-risk spreads, and it is worth seeing how they differ. Both want RELIANCE to rise or at least hold, but they get paid in opposite ways.

• The bull call spread is a debit trade. You pay Rs 7,795 and need RELIANCE to actually climb past 1336 to profit. Your reward, up to Rs 12,205, is larger than your risk.
• The bull put spread is a credit trade. You collect Rs 8,210 and profit even if RELIANCE just sits still or drifts down slightly to 1304. Your risk, Rs 11,790, is larger than your reward.

That contrast is the heart of the choice. The credit spread wins more often, because you do not need a rally, only the absence of a real fall. But when it loses, it loses more than it makes. The debit spread wins less often, since it needs a genuine move, but its reward outweighs its risk. Neither is free money. They are two honest shapes for the same bullish lean.

Be honest about the risk

A credit strategy can feel like easy money, because the cash arrives on day one and you win just by the stock not falling. Resist that feeling. The structure of a credit spread is that you risk more than you can make, here Rs 11,790 at risk to earn Rs 8,210. A run of quiet wins can lull you, and then one sharp fall in RELIANCE hands back several winners at once. The maths only works if you size sensibly and accept the occasional full loss as part of the plan.

The bought 1280 put is what keeps this survivable. Never be tempted to sell the 1320 put on its own without it, hoping to keep the whole premium. A naked short put carries enormous downside if RELIANCE collapses, far beyond the defined Rs 11,790 here. The protection leg is the difference between a defined-risk trade and an open-ended one.

You have now seen both faces of a bullish view, paying a debit and collecting a credit. In the next chapter we keep the credit structure but turn the view around, selling calls instead of puts to profit when RELIANCE stays weak, with the bear call spread.