A bull put spread is a cash-secured put with the tail cut off. Sell a put, buy a cheaper one below it, and the position keeps the same bullish view while replacing a five-figure worst case with a number you choose.

It is the most common defined-risk income trade in retail options, and for a small account it is often the only version of this strategy that fits.

Four numbers define it

The credit is yours if the stock finishes anywhere above the short strike. The maximum loss is reached anywhere at or below the long strike, and equals the width less what you collected. The breakeven sits below the short strike by the credit — the same relationship as a cash-secured put. The capital your broker holds is the maximum loss, because that is the most the position can cost.

Against the cash-secured put

The comparison worth internalising, because it is the actual decision.

The return-on-capital row is spectacular and is the reason spreads are popular. It is also the row most likely to mislead you, so read the next section before acting on it.

What you actually gave up

Premium. The long put costs money, so you collect meaningfully less for the same short strike.

The wheel. This is the big one and it is easy to miss. A cash-secured put that goes wrong hands you 100 shares at a price you chose, and you go sell covered calls against them — the whole wheel depends on that. A credit spread that goes wrong hands you a debit. There is no position to recover from, no shares, no next step. The loss is simply realised.

A clean roll. Rolling two legs is fiddlier and costs more in spreads crossed than rolling one.

So the decision is not “which is better”. It is whether your plan for the bad outcome is owning the stock or taking a defined loss. Both are legitimate. They are different strategies wearing similar charts.

Choosing the width

Move the width slider and watch the trade change character. A $1-wide spread is nearly all protection: tiny credit, tiny risk, and commissions become a large share of the income. A $20-wide spread behaves almost like the naked put — most of the credit, most of the risk.

Common practice sits at $5 on a $100 stock, roughly 5% of the price. The genuinely useful way to choose is to work backwards: decide the dollar amount you are willing to lose on this trade, and let that set the width and contract count.

Managing one

Credit spreads reach a large share of their maximum profit early, because the short leg decays faster than the long leg for most of the position's life. Taking 50% of the maximum profit and closing is a common rule for the reasons in managing winners.

When it goes wrong, it goes wrong faster than a cash-secured put, because the maximum loss is small relative to the credit. Decide in advance what you will do at, say, twice the credit received — waiting for clarity while a defined-risk spread runs to max loss is how the arithmetic quietly turns against you.

What can go wrong

Sizing on capital instead of maximum loss. Ten spreads at $386 is $3,860 at risk, and all of it can go.

Expecting shares. There are none. If you wanted them, sell the put.

Pin risk between the strikes. If the stock settles between your two strikes at expiration, the short leg is assigned and the long expires worthless — leaving you with an unexpected stock position over a weekend. Close before expiry when the stock is anywhere near your strikes.

Commission drag on narrow spreads. Four legs of commission against a $40 credit is a different trade from the one on the screen.