How It Works:
This strategy is a "vertical spread" as it involves 2 different options on $Invesco QQQ(QQQ)$ with the same expiration date.
1. Buy a "Higher Strike" Put: You buy a put option close to the current price of QQQ (at the money). This is your primary "bet" that the market will fall.
2. Sell a "Lower Strike" Put: At the same time you sell a put option with a lower strike price. This generates a premium that offsets the cost of the 1st put.
The result is a net debit or premium you pay to open the trade, representing your maximum potential loss.
Making money in a Bear Put Spread strategy hinges on QQQ falling in price before the options expire. It is designed to profit from a moderate decline in value, not a big crash or a slight increase.
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