Before you hit “Transmit” on a Bear Put Spread, you must verify that the conditions are in your favor. Professionals never trade on a “hunch”; they use a checklist.

1. Directional Confirmation: Is the stock or ETF (like SPY) trading below its 20-day or 50-day Moving Average? We only use this debit strategy when the “Bearish Momentum” is clearly visible.

2. The ROI Check: Does the trade offer at least a 100% Potential ROI? If the debit you are paying is more than half the width of the strikes, the “Smarter Bear” isn’t smart enough. Look for a better strike price.

3. Implied Volatility (IV) Assessment: We prefer to buy debit spreads when IV is relatively low or starting to rise. If fear is already at “Panic” levels, the options are too expensive—you might be better off with a Bear Call Spread (our next course).