538A COMPleTe gUIde TO THe FUTUreS MArKeT
 Strategy 20a: bull put Money Spread (Long put with Lower Strike 
price/Short put with higher Strike price)—Case 1 
example . Buy an August $1,250 gold futures put at a premium of $68.70/oz ($6,870) and simulta-
neously sell an August $1,300 put at a premium of $108.70/oz ($10,870), with August gold futures 
trading at $1,200/oz. (See Table   35.20   a and Figure   35.20   a.)   
Comment.  This is a net credit bull spread that uses puts instead of calls. The maximum gain in this 
strategy is equal to the diff  erence between the premium received for the short put and the premium 
paid for the long put. The maximum loss is equal to the diff  erence between the strike prices minus 
the diff  erence between the premiums. The maximum gain will be achieved if prices rise to the higher 
strike price, while the maximum loss will occur if prices fail to rise at least to the lower strike price. 
The profi  t/loss profi  le of this trade is very similar to the profi  le of the net debit bull call money 
spread illustrated in Figure   35.18  .   
Price of August gold futures at option expiration ($/oz)
Profit/loss at expiration ($)
1,000
5,000
2,500
0
−2,500
−5,000
−7 ,500
−10,000
−12,500
−17 ,500
1,050 1,100 1,150 1,200 1,250
Bear call money spread
Short at-the-money
call
Breakeven price on
spread = $1,229.70
Breakeven price on
short call = $1,238.80
1,300 1,350 1,400
−15,000
Futures price at time
of position initiation
    FIGURE   35.19b    Profi  t/loss Profi  le: Bear Call Money Spread (Short Call with lower Strike 
Price/long Call with Higher Strike Price); Case 2—Short At-the-Money Call/long Out-of-the-
Money Call with Comparison to Short At-the-Money Call