SPX Bull Put Credit Spread: The Complete Guide for Retail Traders (2025)

If you've spent any time in the options trading world, you've heard the phrase "sell premium." The bull put credit spread is one of the cleanest, most defined-risk ways to do exactly that — and on SPX, the most liquid index options market in existence, it becomes a repeatable, systematic income strategy.

This guide covers everything: the mechanics, how we select strikes, the exact rules we use to manage risk, and the real performance data behind 3 years of live trading.

What Is a Bull Put Credit Spread?

A bull put credit spread (also called a put credit spread or bull put vertical) involves two legs executed simultaneously:

• Sell a put option at a higher strike price (closer to the money)
• Buy a put option at a lower strike price (further out of the money)
• Both options share the same underlying and expiration date
• You collect a net credit — money in your account immediately

The trade profits if SPX stays above your short strike at expiration. The bought put caps your maximum loss — that's the "defined risk" component that makes this strategy appropriate for retail accounts.

Why SPX Specifically?

You can trade put credit spreads on almost anything with options — SPY, QQQ, individual stocks. But SPX has five structural advantages that make it the professional's choice:

1. Cash settlement — SPX options settle in cash at expiration. No shares are ever assigned. No overnight risk from assignment.
2. Section 1256 tax treatment — SPX options are taxed 60% long-term / 40% short-term regardless of how long you hold them. This alone can save you $8,000–$15,000 per year vs trading SPY options.
3. Tightest bid-ask spreads — SPX options have some of the tightest spreads of any options market. This reduces slippage on entry and exit.
4. 0DTE availability — SPX has options expiring Monday, Wednesday, and Friday every week, plus daily options. More expirations means more opportunities.
5. $100 multiplier — Each SPX contract controls $100 per point. A $4.80 credit = $480 per contract. High premium per contract reduces commissions as a percentage of return.

How We Select Strikes

Strike selection is where most retail traders go wrong. They either sell too close to the money (high premium, high risk) or too far out of the money (low risk, not worth the capital tie-up). We use a systematic approach:

The 0.10 Delta Rule

We target the 0.10 delta short strike — meaning the short put has approximately a 10% probability of expiring in the money at the time of entry. Historically, this translates to an 88%+ win rate when combined with our exit rules.

Delta of 0.10 means the market is implying a 90% probability that SPX will stay above your short strike. With proper management (we close at 50% profit, not waiting for expiration), the realized win rate has been even higher in our 3-year track record.

Spread Width by VIX Level

Entry Timing

We enter trades during two windows:

• 9:45–11:00 AM ET — After the open volatility settles. Market has found direction. IV has stabilized from the open gap.
• 2:00–3:00 PM ET — Afternoon session, theta starts accelerating. Good for 0DTE trades with only 1–2 hours to expiration.

We never trade at the open (9:30–9:45 AM). The bid-ask spreads are widest, IV is most uncertain, and the risk of a gap continuation is highest.

Position Management: The 50/2x Rule

We use mechanical exit rules — no discretion:

• Profit target: 50% — Close the spread when the credit has decayed to 50% of what we collected. If we sold for $4.80, we buy it back at $2.40. This captures most of the available profit while eliminating the risk of holding into expiration.
• Stop loss: 2x credit — If the spread value rises to 2x what we collected, we close immediately. If we sold for $4.80, we close if it reaches $9.60. This limits max loss to roughly 47% of the spread width.

Real Performance Data

Here's what 3 years of live trading with this exact system looks like:

Every trade in this table is publicly auditable at creditspread.net/performance. Entry timestamp, strikes, credit, exit reason, P&L — all public, all permanent.

Common Mistakes to Avoid

• Holding through expiration — The last 10% of premium is not worth the gamma risk. Always close early.
• Skipping the stop loss — "It'll come back" is how accounts get blown up. Mechanical stops are non-negotiable.
• Trading during earnings weeks — SPX as an index is immune to single-stock earnings, but macro events (Fed, CPI) can cause the same volatility. Check the calendar.
• Oversizing — Risk no more than 2–3% of account per trade. The strategy works because of consistency over hundreds of trades, not any single trade.
• Chasing premium on wide VIX — When VIX is above 30, narrow your spreads. The impulse to collect big premium in high-vol is exactly wrong.

How to Get Started

To trade SPX bull put spreads you need:

1. A brokerage account with options approval (Level 2 minimum for spreads)
2. Minimum $25,000 in the account (pattern day trader rule applies to SPX 0DTE)
3. A broker that supports SPX options: IBKR, Tastytrade, TD Ameritrade/Schwab, Robinhood Gold all work

If you'd rather receive the signals than build the system yourself, our membership service delivers live alerts the moment each trade fires — entry strikes, credit, profit target, and stop loss — straight to your phone.