A bear put spread is an options trading strategy used by investors who have a bearish outlook on a particular stock or financial instrument. This strategy involves the simultaneous purchase and sale of put options with different strike prices, resulting in a net debit for the investor.

Here's how a bear put spread works:

1. Purchase of Put Option: The investor buys a put option, which gives them the right, but not the obligation, to sell the underlying asset at a specified price (known as the strike price) within a certain timeframe (expiration date).

2. Sale of Put Option: Simultaneously, the investor sells another put option on the same underlying asset but with a lower strike price than the first put option. This second put option also has the same expiration date.

The goal of this strategy is to profit from a decline in the price of the underlying asset. By combining the purchase and sale of put options, the investor reduces the initial cost of setting up the trade. However, this strategy also comes with limited profit potential and limited loss potential.

The maximum profit that can be achieved with a bear put spread is the difference between the two strike prices, minus the initial net debit paid to establish the position. This maximum profit is realized if the underlying asset's price falls to or below the lower strike price at expiration.

Conversely, the maximum loss is limited to the initial net debit paid to initiate the spread. This maximum loss occurs if the underlying asset's price rises above the higher strike price at expiration.

The bear put spread is a popular strategy among investors who want to hedge against a potential decline in an asset's price while limiting their downside risk. It's essential for investors to carefully consider the potential risks and rewards before implementing this strategy and to have a clear understanding of options trading and market dynamics.