The S&P 500 lost 2.2% in Wednesday trading. The index is now down over 10% in 2025 and within five percentage points of entering negative territory over the past 12 months. 

There was a time, say 29 months, between September 2022 and February 2025, when the index primarily moved upward. That bullish momentum has vanished, and there is a lot of volatility in its place. 

In Wednesday’s trading, there were 1,161 unusually active options expiring in seven days or more with Vol/OI ratios of 1.24 or higher. Of those, 522 were calls, and 639 were puts, indicative of a bearish market.

For today’s commentary, I’ll focus on the puts, specifically those expiring in 30, 45, and 60 days, or thereabouts.

Here are the pros and cons of using these three SPDR S&P 500 ETF Trust (SPY) puts for bull put spreads. 

The Unusually Active Put Options in the Spotlight

I’ve selected put options with 30, 44, and 65 DTEs (days to expiration).      

As you can see, the 30-day strike is OTM (out of the money), the 44-day strike is ITM (in the money), and the 65-day strike is deep OTM.

Here are my thoughts on each of them. 

May 16 $452 Put (30 DTE)

The optimal DTE for a bull put spread is 30 to 45 days. That’s because it balances premium decay, or theta, profit probability, and risk management.

Here’s what Barchart says about bull put spreads:

“The bull put spread is a short put option strategy where you expect the underlying security to increase in value. The bull put option strategy involves selling a put option and buying a put option at a lower strike price. …Maximum profit is achieved if the security price is above the higher strike price at expiration.”

So, in this instance, you would sell the $452 strike and buy a lower put strike with the same expiration date of May 16.

Right off the bat, you’ll notice that the risk/reward is one-sided and not in a good way. The second leg of the trade has put strikes ranging from $435 to $449, below the $452 strike for the first leg. 

As a result, the highest maximum profit available involves the $435 strike at $0.67 [$2.59 bid premium - $1.92 ask premium], while the maximum loss is $16.33, for a risk/reward of 24.37. 

This is not a bet to make. You’re unlikely to lose money because the maximum profit is achieved above a $451.33 share price. However, you want to select two puts closer to the current share price.  

May 30 $600 Put (44 DTE)

In this example, you sell the May 30 $600 put deep OTM for $73.02 bid premium and buy a put with a lower strike price. 

Which strike should you go with?

There are three things to consider: Maximum Profit, Risk/Reward, and Loss Probability. If you’re income-focused, you might value the first one. If you’re a risk taker, it could be risk/reward; if you’re somewhat risk-averse, it would be loss probability. 

I’d be interested in a balance of the three. 

Using data from Barchart’s vertical spread page early in Thursday trading, the $599 short put and $565 long put have a maximum profit of $31.15, a risk/reward of 0.09 to 1, and a 79.1% loss probability.

Given the maximum loss of just $2.85, the loss probability isn’t an issue. In this instance, you make money if the share price exceeds $567.85 in 44 days at expiration.  

It’s a no-brainer for income-oriented investors with a 49% annualized return [$31.15 maximum profit / $527.52 share price * 365 / 44].     

June 20 $285 Put (65 DTE)

In this example, selling the June 20 $285 put is deep OTM. The long put will be even further OTM. 

Based on yesterday’s bid price of $0.50 at the close, the ask price for the long put will be lower than this. As I write this mid-morning on Thursday, the bid price for the $285 put is $0.46. 

If we go $30 lower (6 strikes) to the $250 long put, the ask price is $0.27, for a maximum profit (net credit) of $0.19 [$0.46 bid price - $0.27 ask price]. 

The maximum loss would be $34.81 [$285 strike - $250 strike - net credit]. 

The risk/reward is off the charts at 183.21 to 1, while the loss probability is virtually non-existent. That’s because the maximum loss would only occur if the SPY share price at expiration were below $215.19 [$250 strike price - $34.81 maximum loss]. 

For that to happen, the economy would have to go into a significant recession in the next 65 days. While things might be grim, it hasn’t gotten to this point.

Yet. 

Bottom Line

There is no question that the May 13 $600 short put with the $565 long put is the only sensible bull put spread from my three examples of puts expiring between 30 and 65 days. 

The strike price differential of these three unusually active short put options used here is too significant to be practical in actual trading. 

However, for those just learning, it’s a good way to think through a particular strategy--in this case, bull put spreads--to better understand their mechanics. 

Until tomorrow.