When to use this strategy:  when you think the stock will go down somewhat or at least is a bit more likely to fall than to rise.  

Profit is limited, reaching maximum if stock ends at or below the lower strike at expiration. It is equal to difference between strikes minus initial debit. At expiration, break-even point will be the higher strike minus initial debit.

Loss reaches its maximum, if stock at expiration is at or above the higher strike. It is equal to the net initial debit.

• a good position if you want to be in the stock but are unsure of bearish expectations  (less aggressive than ""buy puts")

• no margin requirements
• the most popular bullish strategy
• so-called "vertical" put spreads have the same expiration date for both legs

 

                                                                     

• Time decay: if the stock is midway between strikes, no time effect. At higher strike, profits increase at fastest rate with time. At lower strike, losses increase at maximum rate with time.

• Bear put spreads have the following advantages over bear call spreads. You are not risking early exercise of short option. Besides, bear put spreads perform much better  than call spreads if underlying stock drops quickly.