342 Part Ill: Put Option Strategies 
FIGURE 23-2. 
Put buy and call credit (bear) spread. 
+$1,000 Halfway to Expiration 
/ 
Stock 
0 60 110 
-e a. 
-$1,000 At Expiration 
-$2,000 
The curved line on Figure 23-2 shows how the three-way spread would behave 
if one looked at it halfway to its expiration date. In that case, it has a curved appear­
ance much like the outright purchase of a put option. 
Thus, this strategy could be appealing to bearishly-oriented traders, especially 
when the options are expensive. It might have certain advantages over an outright put 
purchase in that case, but it does require a larger margin investment and has theo­
retically larger risk. 
A SIMPLE FOLLOW-UP ACTION 
FOR BULL OR BEAR SPREADS 
Another way of combining puts and calls in a spread can sometimes be used when 
one has a bull or bear spread already in place. Suppose that one owns a call bull 
spread and the underlying stock has advanced nicely. In fact, it is above both of the 
strikes used in the spread. However, as is often the case, the bull spread may not have 
widened out to its maximum profit potential. One can use the puts for two purposes 
at this point: (1) to determine whether the call spread is trading at a "reasonable" 
value, and (2) to try to lock in some profits. First, let's look at an example of the "rea­
sonable value" verification.