Bull Put Spread
Function: Medium-Risk Speculation
Establishing a Bull Put Spread involves selling a put at a higher strike price and buying a put with the same expiration date, but with a lower strike price. The basic idea is that since the think the underlying asset will be bullish, you sell puts that will expire worthless. the reason to buy the puts at the lower strike price is to mitigate your risk in case you are wrong about the asset being bullish. Compared to most option spreads, the bull put spread is a low risk, low reward strategy because it limits both your maximum losses and your maximum gains.
Bull Put Spread Payoff Graph: