what is a bear spread 
a bear spread is an options strategy used when one is mildly bearish and wants to maximize profit while minimizing losses the goal is to net the investor a profit when the price of the underlying security declines the strategy involves the simultaneous purchase and sale of either puts or calls for the same underlying contract with the same expiration date but at different strike prices a bear spread may be contrasted with a bull spread which is utilized by investors expecting moderate increases in the underlying security understanding bear spreadsthe main impetus for an investor to execute a bear spread is that they expect a decline in the underlying security but not in an appreciable way and want to either profit from it or protect their existing position there are two main types of bear spreads that a trader can initiate a bear put spread and a bear call spread both instances would be classified as vertical spreads a bear put spread involves simultaneously buying one put so as to profit from the expected decline in the underlying security and selling writing another put with the same expiry but at a lower strike price to generate revenue to offset the cost of buying the first put this strategy results in a net debit to the trader s account a bear call spread on the other hand involves selling writing a call to generate income and buying a call with the same expiry but at a higher strike price to limit the upside risk this strategy results in a net credit to the trader s account bear spreads can also involve ratios such as buying one put to sell two or more puts at a lower strike price than the first because it is a spread strategy that pays off when the underlying declines it will lose if the market rises however the loss will be capped at the premium paid for the spread image by julie bang investopedia 2019bear put spread examplesay that 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 month the investor can put on a bear put spread by buying a 48 put and selling writing a 44 put for a net debit of 1 the best case scenario is if the stock price ends up at or below 44 the worst case scenario is if the stock price ends up at or above 48 options expire worthless and the trader is down the cost of the spread bear call spread exampleone can also use a bear call spread 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 month the investor sells writes a 44 call and buys a 48 call for a net credit of 3 if the stock price ends up at or below 44 then the options expire worthless and the trader keeps the spread credit conversely if the stock price ends up at or above 48 then the trader is down the spread credit minus 44 48 amount benefits and drawbacks of bear spreadsbear spreads are not suited for every market condition they work best in markets where the underlying asset is falling moderately and not making large price jumps moreover while bear spreads limit potential losses they also cap possible gains limits losses