InvestGen Archives

Mar

2025

What Is the Rule of 55? How It Works for Early Retirement

By Rebecca Lake | Growing Wealth, invest, Investing | Comments Off

The rule of 55 is a provision in the Internal Revenue Code that allows workers to withdraw money from their employer-sponsored retirement plan without a penalty once they reach age 55. Distributions are still taxable as income but there’s no additional 10% early withdrawal penalty.

The IRS rule of 55 applies to 401(k) and 403(b) plans. If you have either of these types of retirement accounts through your employer, it’s important to understand how this rule works when taking retirement plan distributions.

Key Points

• The rule of 55 allows penalty-free withdrawals from employer-sponsored retirement plans for individuals aged 55 or older.

• This rule applies to 401(k) and 403(b) plans, allowing early access to retirement funds without the usual 10% penalty.

• To qualify, individuals must have separated from their employer at age 55 or older and leave the funds in the employer’s plan.

• The rule of 55 does not apply to IRAs, and certain conditions and restrictions may vary depending on the specific retirement plan.

• While the rule of 55 can be beneficial for early retirees, it’s important to consider tax implications and other factors before utilizing it.

What Is the Rule of 55?

The rule of 55 is an exception to standard IRS withdrawal rules for qualified workplace plans, including 401(k) and 403(b) plans. Normally, you can’t withdraw money from these plans before age 59 ½ without paying a 10% early withdrawal penalty. This penalty is only waived for certain allowed exceptions, of which the rule of 55 is one.

Specifically, the rule of 55 applies to “distributions made to you after you separated from service with your employer after attainment of age 55,” per the IRS. It doesn’t matter whether you quit, get laid off or retired — you can still withdraw money from your retirement plan penalty-free. If you’re a qualified public safety employee, this exception kicks in at age 50 instead of 55.

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

How Does the Rule of 55 Work?

The rule of 55 for 401(k) and 403(b) plans allows workers to access money in their retirement plans without a 10% early withdrawal penalty. This rule applies to current workplace retirement plans only.

You can’t use the rule of 55 to take money from a 401(k) or 401(b) you had with a previous employer penalty-free unless you first roll over those account balances into your current plan before separating from service.

This rule doesn’t apply to individual retirement accounts (IRA) either. So, you can’t use the rule of 55 to tap into an IRA before age 59 ½ without a tax penalty. There are, however, some exclusions that might allow you to do so. For example, you could take money penalty-free from an IRA if you’re using it for the purchase of a first home.

¹Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

Rule of 55 Requirements

To qualify for a rule of 55 401(k) or 403(b) withdrawal, you’ll need to:

• Be age 55 or older

• Separate from your employer at age 55 or older

• Leave the money in your employer’s plan (rule of 55 benefits are lost if you roll funds over to an IRA)

You also need to have a 401(k) or 403(b) plan that allows for rule of 55 withdrawals. If your plan doesn’t permit early withdrawals before age 59 ½ , then you won’t be able to take advantage of this rule.

Also keep in mind that IRS rules require a 20% tax withholding on early withdrawals from a 401(k) or similar plan. This applies even if you plan to roll the money over later to another qualified plan or IRA. So you’ll need to consider how that withholding will affect what you receive from the plan and how much you may still owe in taxes on your 401(k) later when reporting the distribution on your return.

Example of the Rule of 55

Here’s how the rule of 55 works. Say you lose your job or decide to retire early at age 55, and you need money to help pay your bills and cover lifestyle expenses. Under the rule of 55, you can take distributions from the 401(k) or 403(b) plan you were contributing to up until the time you left your job. You will not be charged the typical 10% early withdrawal penalty in this instance.

Also worth noting: If you decide to go back to work a year or two later at age 56 or 57, say, you can still continue to take distributions from that same 401(k) or 403(b) plan, as long as you have not rolled it over into another employer-sponsored plan or IRA.

Should You Use the Rule of 55?

The IRS rule of 55 is designed to benefit people who may need or want to withdraw money from their retirement plan early for a variety of reasons. For example, you might consider using this rule if you:

• Decide to retire early and need your 401(k) to close the income gap until you’re eligible for Social Security benefits

• Are taking time away from work to act as a caregiver for a spouse or family member and need money from your retirement plan to cover basic living expenses

• Want to take some of the money in your 401(k) early to help minimize required minimum distributions (RMDs) later

In those scenarios, it could make sense to apply the rule of 55 in order to access your retirement savings penalty-free. On the other hand, there are some situations where you may be better off letting the money in your employer’s plan continue to grow.

For instance, if your employer’s plan requires you to take a lump sum payment, this could push you into a substantially higher tax bracket. Having to pay taxes on all of the money at once could diminish your account balance more so than spreading out distributions — and the associated tax liability — over a longer period of time.

You may also reconsider taking money from your 401(k) early if you still plan to work in some capacity. If you have income from a new full-time job or part-time job, for instance, you may not need to withdraw funds from your 401(k) at all. But if you change your mind later and decide to return to work, you can continue to take withdrawals from the same retirement plan penalty-free.

Other Ways to Withdraw From a 401(k) Penalty-Free

Aside from the rule of 55, there are other exceptions that could allow you to take money from your 401(k) penalty-free. The IRS allows you to do so if you:

• Reach age 59 ½

• Pass away (for distributions made to your plan beneficiary)

• Become totally and permanently disabled

• Need the money to pay for unreimbursed medical expenses exceeding 10% of your adjusted gross income (AGI)

• Need the money to pay health insurance premiums while unemployed

• Are a qualified reservist called to active duty

You can also avoid the 10% early withdrawal penalty by taking a series of substantially equal periodic payments. This IRS rule allows you to sidestep the penalty if you agree to take a series of equal payments based on your life expectancy. You must separate from service with the employer that maintains your 401(k) in order to be eligible under this rule. Additionally, you must commit to taking the payment amount that’s required by the IRS for a minimum of five years or until you reach age 59 ½, whichever occurs first.

A 401(k) loan might be another option for withdrawing money from your retirement account without a tax penalty. You might consider this if you’re not planning to retire but need to take money from your retirement plan.

With a 401(k) loan, you’ll have to pay the money back with interest. Your employer may stop you from making new contributions to the plan until the loan is repaid, generally over a five-year term. If you leave your job where you have your 401(k) before the loan is repaid, any remaining amount becomes payable in full. If you can’t pay the loan off, the whole amount is treated as a taxable distribution and the 10% early withdrawal penalty also may apply if you’re under age 59 ½.

The Takeaway

Early retirement may be one of your financial goals, and achieving it requires some planning. Maxing out your 401(k) or 403(b) can help you save the money you’ll need to retire early, and you may be able to access the funds early with the rule of 55.

You may also consider investing in an IRA or a taxable brokerage account to save for retirement. A brokerage account doesn’t have age restrictions, so there are no penalties for early withdrawals before age 59 ½. You’ll have to pay capital gains tax on any profits realized from selling investments, but you can allow the balances in your 401(k) or IRA to continue to grow on a tax-advantaged basis.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

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FAQ

Can I use the rule of 55 if I get another job?

Yes, you can use the rule of 55 to keep withdrawing from your 401(k) if you get another job. As long as it’s the same 401(k) you were contributing to when you left your job and you haven’t rolled it over into an IRA or another plan, you can still continue to take distributions from it whether you get a full-time or part-time job.

How do I know if I qualify for Rule of 55?

First, find out if your employer allows for the rule 55 withdrawals. Check with your HR or benefits department. If they do, and you are 55 or older (or age 50 or older if you are a public safety worker), you should qualify for the rule of 55 and be able to take distributions from your most recent employer’s plan. You cannot take penalty-free distributions from 401(k) plans with previous employers.

How do I claim the rule of 55?

To start taking rule of 55 withdrawals, typically all you need to do is reach out to your plan’s administrator and prove that you qualify — meaning that you are age 55 or older and that you’re leaving your job.

What is the rule of 55 lump sum?

Some 401(k) plans may require you to take a lump sum payment if you are using the rule of 55. That could create a big tax liability since you will need to pay income tax on the money you withdraw. In this case you might want to explore other alternatives to the rule of 55. It may also be helpful to speak with a tax professional.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Photo credit: iStock/bagi1998

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

Mar

2025

Guide to Short Put Spreads

By Dan Miller | Growing Wealth, invest, Investing, Terminology | Comments Off

Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.

A short put spread, sometimes called a bull put spread or short put vertical spread, is an options trading strategy that investors may use when they expect a slight rise in the price of an underlying asset. This strategy, which involves a short put and a long put with the same expiration, but different strike prices, allows an investor to profit from an increase in the underlying asset’s price while also limiting losses from downward price movement. An investor using this spread can also determine their maximum potential profit and loss upfront.

When trading options, you have various strategies, like short put spreads, from which you can choose. The short put spread strategy can be a valuable trade for investors with a neutral-to-bullish outlook on an asset. Which options trading strategy is right for you will depend on several factors, like your risk tolerance, cash reserves, and perspective on the underlying asset.

Key Points

• A short put spread is a neutral-to-bullish options trading strategy.

• Short put spreads involve selling a put with a higher strike price (the short put) and buying a put at a lower strike price (the long put), with the same expiration.

• Time decay benefits this strategy, reducing the value of the sold put more than the bought put.

• Maximum profit is achieved if the underlying asset’s price increases or remains stable.

• A short put spread has both limited risk and lower profit potential compared to buying the asset outright.

What Is a Short Put Spread?

A short put spread is an options trading strategy that involves buying one put option contract and selling another put option on the same underlying asset with the same expiration date but at different strike prices. This strategy is a neutral-to-bullish trading play, meaning that the investor believes the underlying asset’s price will stay flat or increase during the life of the trade.

A short put spread is a credit spread in which the investor receives a credit when they open a position. The trader buys a put option with a lower strike price and sells a put option with a higher strike price. The difference between the price of the two put options is the net credit the trader receives, which is the maximum potential profit in the trade, after any commissions and fees.

The maximum loss in a short put spread is the difference between the strike prices of the two puts minus the net credit received. This gives the trading strategy a defined downside risk.

Although the strategy has limited upside risk, external factors, such as fees and the possibility of early assignment, can still impact profitability.

A short put spread is also known as a short put vertical spread because of how the strike prices are positioned — one lower and the other higher — even though they have the same expiration date.

How Short Put Spreads Work

With a short put spread, the investor uses put options, which give the investor the right — but not always the obligation — to sell a security at a given price during a set period of time.

An investor using a short put spread strategy will sell a put option at a given strike price and expiration date, receiving a premium for the sale. This option is known as the short leg of the trade.

Simultaneously, the trader will also buy a put option at a lower strike price, paying a premium. This option is called the long leg. The premium for the long leg put option will always be less than the short leg since the lower strike put is further out of the money. Because of the difference in premiums, the trader receives a net credit for setting up the trade.

Recommended: In the Money vs Out of the Money Options

Short Put Spread Example

Say stock ABC is trading around $72. You feel neutral to bullish toward the stock, so you open a short put spread by selling a put option with a $72 strike price and buying a put with a $70 strike. Both put options have the same expiration date. You sell the put with a $72 strike price for a $1.75 premium and buy the put with a $70 strike for a $0.86 premium.

You collect the difference between the two premiums, which is $0.89 ($1.75 – $0.86), less any fees. Since each option contract is usually for 100 shares of stock, you’d collect an $89 credit before considering costs or margin requirements.

Recommended: Guide to How Options Are Priced

Maximum Profit

The credit collected up front is the maximum profit in a short put spread. In a short put spread, you can achieve your maximum profit when the stock price remains at or above the strike price of the option you sold. Both put options expire worthless in this scenario.

In our example, as long as stock ABC closes at or above $72 at expiration, both puts will expire worthless and you will keep the $89 credit you received when you opened the position.

Maximum Loss

The maximum loss in a short put spread is the difference between the strike prices of the two put options minus the credit you receive initially, plus any commissions and fees incurred. You will realize the maximum loss in a short put spread if the underlying asset’s price expires below the strike price of the put option you bought.

In our example, you will see the maximum loss if stock ABC trades below $70, the strike price of the put option you bought, at expiration. The maximum loss will be $111 in this scenario, not including commissions and fees.

Maximum loss: ($72 – $70) – ($1.75 – $0.86) = $1.11 x 100 shares = $111

Breakeven

The breakeven on a short put spread trade is the price the underlying asset must close at for the investor to come away even. They neither make nor lose money on the trade, not including commissions and investment fees.

To calculate the breakeven on a short put spread trade, you subtract the net credit you receive upfront from the strike price of the short put contract you sold, which is the option with the higher strike price.

In our example, you subtract the $0.89 credit from $72 to get a breakeven of $71.11. If stock ABC closes at $71.11 at expiration, you will lose $89 from the short leg of the trade with a $72 strike price, which will be balanced out by the $89 cash credit you received when you opened the position.

Set-Up

To set up a short put spread, you first need to find a security that you are neutral to bullish on. Once you have found a reasonable candidate, you’ll want to set it up by entering your put transactions.

You first sell to open a put option contract with a strike price near where the asset is currently trading. You then buy to open a put option with a strike price that’s out-of-the-money; the strike price of this contract will be below the strike price of the put you are selling. Both of these contracts will have the same expiration date.

Maintenance

The short put spread does not require much ongoing maintenance since your risk is defined to both upside and downside.

However, you may want to pay attention to the possibility of early assignment, especially with the short leg position of your trade — the put with the higher strike price. You might want to close your position before expiration so you don’t have to pay any potential assignment fees or trigger a margin call. Early assignment occurs when the holder of a short position is required to fulfill their obligation before expiration, typically when the option is in the money. Investors may choose to close their position before expiration to avoid the risk of early assignment, especially if the underlying asset is approaching (or has surpassed) the short option’s strike price.

Exit Strategy

If the stock’s price is above the higher strike price at expiration, there is nothing you have to do; both puts will expire worthless, and you will walk away with the maximum profit of the credit you received.

If the stock’s price is below the lower strike price of the long leg of the trade at expiration, both options will be in the money. The short put will be assigned, requiring the investor to buy shares at the higher strike price, while the long put offsets some of the loss by allowing the sale of shares at the lower strike price.This results in the maximum loss, which is the difference in strike prices minus the net credit received.

Before expiration, however, you can exit the trade to avoid having to buy shares that you may be obligated to purchase since you sold a put option. To exit the trade, you can buy the short put contract to close and sell the long put contract to close.

Impacts of Time, Volatility, and Price Change

Changes in the price and volatility of the underlying stock and the passage of time can affect a short put spread strategy in various ways.

Time

Time decay benefits this strategy because the value of the sold put declines faster than the bought put. As expiration gets closer, the difference in time value erosion allows the trader to keep more of the initial credit received.

Volatility

Because the strategy consists of both a long and a short put, changes in volatility tend to have a limited effect on the overall spread. While each leg may respond differently to volatility shifts, the combined position mitigates much of this impact.

Price

A short put spread is a bullish option strategy. You have no risk to the upside and will achieve your maximum profit if the underlying stock closes above the strike price of the higher put option. You are sensitive to price decreases of the underlying stock and will suffer the maximum loss if the stock closes below the strike price of the lower put option.

Pros and Cons of Short Put Spreads

Here are some of the advantages and disadvantages of using short put spreads:

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Short Put Spread Pros:

• No risk to the upside

• Limited risk to the downside; maximum loss is known upfront

• Can earn a positive return even if the underlying does not move significantly

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Short Put Spread Cons:

• Lower profit potential compared to buying the underlying security outright

• Maximum loss is generally larger than the maximum potential profit

• Difficult trading strategy for beginning investors

Short Put Calendar Spreads

A short put calendar spread is another type of spread that uses two different put options. With a short put calendar spread, the two options have the same strike price but different expiration dates. You sell a put with a further out expiration and buy a put with a closer expiration date.

Traders may use a short put calendar spread when they expect minimal price movement in the underlying asset, but anticipate a decline in implied volatility. This strategy differs from a short put spread, which benefits more from directional price movement rather than volatility shifts. The short put calendar spread seeks to profit from the faster decay of the near-term option relative to the longer-term option.

Alternatives to Short Put Spreads

Short put vertical spreads are just one of the several options spread strategies investors can use to bolster a portfolio.

Bull Put Spreads

A bull put spread is another name for the short put spread. The short put spread is considered a bullish investment since you’ll get your maximum profit if the stock’s price increases.

Bear Put Spread

As the name suggests, a bear put spread is the opposite of a bull put spread; investors will implement the trade when they have a bearish outlook on a particular underlying asset. With a bear put spread, you buy a put option near the money and then sell a put option on the same underlying asset at a lower strike price.

Call Spreads

Investors can also use call spreads to achieve the same profit profile as either a bull put spread or a bear put spread. With a bull call spread, you buy a call at one strike price (usually near or at the money) and simultaneously sell a call option on the same underlying with the same expiration date further out of the money.

Conversely, with a bear call spread, an investor sells a call option at a lower strike price and buys a call option at a higher strike price, both with the same expiration date. This strategy is used when the trader expects the underlying asset’s price to decline or remain below the sold call’s strike price, aiming to profit from the initial net credit they received.

The Takeaway

A short put spread is an options strategy that allows you to collect a credit by selling an at-the-money put option and buying an out-of-the-money put with the same expiration on the same underlying security. A short put spread is a bullish strategy where you achieve your maximum profit if the stock closes at or above the strike price of the put option you sold.

While this trading strategy has a limited downside risk, it provides defined risks and rewards, which may differ significantly from owning the underlying security outright.

SoFi’s options trading platform offers qualified investors the flexibility to pursue income generation, manage risk, and use advanced trading strategies. Investors may buy put and call options or sell covered calls and cash-secured puts to speculate on the price movements of stocks, all through a simple, intuitive interface.

With SoFi Invest® online options trading, there are no contract fees and no commissions. Plus, SoFi offers educational support — including in-app coaching resources, real-time pricing, and other tools to help you make informed decisions, based on your tolerance for risk.

Explore SoFi’s user-friendly options trading platform.

FAQ

Is a short put spread bullish or bearish?

A short put spread is a neutral to bullish options strategy, meaning you believe the price of an underlying asset will increase during the life of the trade. You will make your maximum profit if the stock closes at or above the strike price of the higher-priced option at expiration.

How would you close a short put spread?

To close a short put spread, you enter a trade order opposite to the one you entered to open your position. This would mean buying to close the put you initially sold and selling to close the put you bought to open.

What does shorting a put mean?

Shorting a put means selling a put contract. When you sell a put option contract, you collect a premium from the put option buyer. You’ll get your maximum profit if the underlying stock closes at or above the put’s strike price, meaning it will expire worthless, allowing you to keep the initial premium you received when you opened the position.

Photo credit: iStock/akinbostanci

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

Mar

2025

What Is a Bull Put Credit Spread? Definition and Example

By Colin Dodds | Growing Wealth, invest, Investing | Comments Off

The bull put credit spread, also referred to as bull put spread or short put credit spread, is an options trading strategy designed to benefit from moderately bullish market sentiment.

In a bull put credit spread, an investor buys one put option and sells another at a higher price. Each put option has the same underlying security and the same expiration date, but a different strike (exercise) price. The strategy has limited upside and downside potential.

Investors employing a bull put credit spread receive a net credit from the difference in option premiums. The strategy seeks to profit from a modest increase in price of the underlying asset before the expiration date. The trade will also benefit primarily from time decay and, to a lesser extent, from a decline in implied volatility.

Key Points

• A bull put credit spread provides opportunities in a bullish or neutral market, where the underlying asset is expected to rise or stay stable.

• This strategy involves selling a put option at a higher strike price and buying one at a lower strike price.

• The maximum potential loss is higher than the maximum potential gain in a bull put credit spread.

• A bull put credit spread benefits from time decay as the expiration date approaches.

• Limited risk and reward define the bull put credit spread, making it suitable for cautious traders.

How a Bull Put Credit Spread Works

In a bull put credit spread, the investor uses put options. Put options give the buyer the right – but not the obligation – to sell a security at a specified price during a set period of time. They’re typically used by investors who believe the price of an underlying security will go down.

In a bull credit spread, however, the strategy is structured for investors who expect the underlying stock’s price to rise or remain above a certain level before the option expires.

To construct a bull put credit spread, a trader sells a put option at a given strike price and expiration date, receiving the premium (a credit) for the sale. This option is known as the short leg because the trader sells it, collecting a premium upfront.

At the same time, the trader buys a put option at a lower strike price, paying a premium. This option is called the long leg. The premium for the long leg put option will always be less than the short leg, since the lower strike put is further out-of-the money. Thus, the trader receives a net credit for setting up the trade.

The difference between the strike prices of the two sets of options is known as the “spread,” giving the strategy its name. The “credit” in the name comes from the fact that the trader receives a net premium upfront.

Profiting from a Bull Put Credit Spread

In a properly executed bull put credit spread strategy, as long as the value of the underlying security remains above a certain level, the strategy can produce a profit as the difference in value between the two sets of options diminish. This reduction in the “spread” between the two put options reflects time decay, a dynamic by which the value of an options contract declines as that contract grows closer to its expiration date.

The “bull” in the name of this strategy reflects the investor’s expectation that the value of the underlying security will remain above the short put strike price before the option expires. Although higher asset prices may improve the probability of maximum profit, the potential gain is capped at the net credit received. If the price of the underlying security drops under the long-put strike price, then the options trader can lose money on the strategy.

Recommended: How to Trade Options

Maximum Gain, Loss, and Break-Even of a Bull Put Credit Spread

Investors in a bull put credit spread strategy make money when the value of the underlying security of the options goes up, but the trade comes with limited loss and gain potential. The short put gives the investor a credit, but caps the potential upside of the trade. And the purpose of the long put position — which the investor purchases — protects against loss.

The maximum gain on a bull put credit spread will be obtained when the price of the underlying security remains at or above the higher strike price of the short put. In this case, both put options are out-of-the-money, and expire worthless, so the trader keeps the full net premium received when the trade was initiated.

The maximum loss will be reached when the price of the underlying security falls below the strike price of the long put (lower strike). Both put options would be in-the-money, and the loss (at expiration) will be equal to the spread (the difference in the two strike prices) less the net premium received.

The breakeven point for the strategy is calculated by subtracting the net premium received upfront from the strike price of the short put. This represents the price level at which the investor neither gains or loses money.

Example of a Bull Put Credit Spread

Here’s an example of how trading a bull put credit spread can work:

Let’s say a qualified investor thinks that the price of a stock may increase modestly or hold at its current price of $50 in the next 30 days. They choose to initiate a bull put credit spread.

The investor sells a put option with a strike price of $50 for a premium of $3, and buys a put option with a strike price of $45 for a premium of $1, both expiring in 30 days. They earn a net credit of $2 — the difference in premiums. And because one options contract controls 100 shares of the underlying asset, the total credit received would be $200.

Scenario 1: Maximum Profit

The best case scenario for the investor is that the price of the stock is at or above $50 on expiration day. Both put options expire worthless, and the maximum profit is reached. Their total gain is $200, equal to $3 – $1 = $2 x 100 shares, less any commissions and fees. Once the price of the stock is above $50, the higher strike price, the trade ceases to gain additional profit.

Scenario 2: Maximum Loss

The worst case scenario for the investor is that the price of the stock is below $45 on expiration day, resulting in both options being in-the-money. The maximum loss would be reached, which is $300, plus any commissions and fees. That’s because $500 ($50 – $45 x 100) minus the $200 net credit received is $300. Once the price of the stock is below $45, the trade ceases to lose any more money.

Scenario 3: Breakeven

Suppose that on expiration day, the stock trades at $48. The long put, with a strike of $45, is out-of-the-money, and expires worthless, but the short put is in-the-money by $2. The loss on this option is equal to $200 ($2 x 100 shares), which is offset by the $200 credit received. The trader breaks even, as the profit and loss net out to $0.

Related Strategies: Bear Put Debit Spread

The opposite of the bull put credit spread is the bear put debit spread, also known as a debit put spread or bear put spread. In a bear put spread, the investor buys a put option at one strike price and sells a put option at a lower strike price — essentially swapping the order of the bull put credit spread. While this sounds similar to the bull put spread, the construction of the bear put spread results in two key differences.

First, the bear put spread, as its name implies, represents a “bearish” bet on the underlying security. The trade will tend to profit if the price of the underlying asset declines.

Second, the bear put spread is a “debit” transaction — the trader will pay a net premium to enter it, since the premium for the long leg (the higher strike price option) will be more than the premium for the short leg (the lower strike price option).

Bull Put Credit Spread Pros and Cons

There are benefits and drawbacks to using bull put credit spreads when investing.

Pros

Here are some of the key advantages to using a bull put credit spread:

• Potential losses (as well as rewards) are limited when the price moves in an adverse direction; an investor can determine their maximum potential loss upfront.

• The inevitable time decay of options improves the probability that the trade will be profitable.

• Bull put credit spread traders can still make a profit even if the underlying stock price drops slightly, as long as it remains above the breakeven point.

Cons

In addition to the benefits, there are also some disadvantages to be aware of when considering a bull put strategy.

• The profit potential in a put credit spread is limited compared to outright stock purchases, as the strategy focuses on generating income rather than capital appreciation.

• On average, the maximum loss in the strategy is larger than the maximum gain.

• Options strategies are more complicated than some other forms of investing, making it difficult for beginner investors to engage.

The Takeaway

Bull put credit spreads are bullish options trading strategies, where an investor sells one put option and buys another with a lower strike price. That investor can make money when the value of the underlying security of the options goes up, but the trade comes with limited loss and gain potential.

Explore SoFi’s user-friendly options trading platform.

Photo credit: iStock/Ridofranz

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q125-119

Mar

2025

What Are Bull Put Spreads & How Do They Work?

Bull Put Spread: How This Options Strategy Works

By Brian Nibley | Going to College, invest, Investing, Terminology | Comments Off

A bull put spread is an options trading strategy that investors might use when they have a moderately bullish view of an asset, meaning they think the price will increase slightly. The strategy provides the potential for profit from an increase in an underlying asset’s price while limiting losses if an asset’s price declines.

Bull put spreads and options trading are not for everyone, but learning the ins and outs of this commonly used vertical options spread could be useful to traders’ looking to pursue gains while capping downside risk.

Key Points

• Bull put spreads allow investors to profit from modest price increases in the underlying asset, aligning with a moderately bullish market outlook.

• In a bull put spread strategy, an investor sells a put option, and buys another put option on the same security, with the same expiration date, but with lower strike price.

• The maximum gain with this strategy is the difference between the premium received for selling the put with the higher strike price and the premium paid for buying the second put, minus any commissions or fees.

• This strategy limits risk by capping maximum loss, providing protection from significant downside risk.

• Time decay helps as the short put loses value faster than the long put, letting traders keep more of the initial credit if the asset’s price stays stable or rises.

• Bull put spreads can be adjusted to align with different risk tolerances and market views, making them a flexible tool within options trading.

What Is a Bull Put Spread?

A bull put spread is an options trading strategy that involves buying a put option and selling another put option on the same underlying asset with the same expiration date, but at different strike prices. The trade is considered a neutral-to-bullish strategy, since it’s designed so the maximum benefit occurs when an asset’s price moderately increases.

To execute a bull put spread, a trader will simultaneously sell a put option at a specific strike price (the short leg of the trade) and buy a put option with a lower strike price (the long leg of the trade).

The trader receives a premium for selling the option with a higher strike price but pays a premium for buying the put option with a lower strike price. The premium paid for the long leg put option will always be less than the short leg since the lower strike put is further out of the money. The difference between the premium received and the premium paid is the maximum potential profit in the trade.

The goal of the bull put spread strategy is to finish the trade with the premium earned by selling the put (sometimes referred to as writing a put option) and lose no more than the premium paid for the long put.

A bull put spread options trading strategy is sometimes called a short put spread or a credit put spread.

How a Bull Put Spread Works

Bull put spreads focus on put options, which are options contracts that give the buyer the right – but not always the obligation – to sell a security at a given price (the strike price) during a set period of time.

The bull put spread strategy earns the highest profit in situations where the underlying stock trades at or above the strike price of the short put option – the put option sold with the higher strike price – upon expiration. This strategy, therefore, works best for assets that the traders of a bull put spread believe will trade slightly upwards.

The strategy offers investors the potential to benefit from a stock’s rising price without having to hold shares. An options strategy like this also caps downside risk because the maximum loss is calculated as the difference between the strike prices of the two puts minus the net credit received.

Even though the risk is limited, there can still be times when it makes sense to close out the trade.

Max Profit and Risk

A bull put spread is meant to profit from a rising stock price, time decay, or both. This strategy caps both potential profit and loss, meaning its risk is limited.

The profit of a bull put spread is capped at the premium received by selling the short leg of the trade, minus the premium spent buying the long leg put option. This maximum profit is therefore seen if the underlying asset finishes at any price above the strike price of the short leg of the trade.

Maximum profit = premium received for selling put option – premium paid for buying put option

The maximum loss of a bull put spread is the difference between the strike prices of the short put and the long put, minus the net premium received. This occurs if the underlying asset’s price falls below the long put’s strike price at expiration.

Maximum loss = strike price of short put – strike price of long put – net premium received

The breakeven point of a bull put spread is the price the underlying asset trades at expiration so that the trader will come away even. The breakeven point is calculated as the strike price of the short put (the higher strike price) minus the net premium received upfront for the sale and purchase of both puts. At the breakeven, the trader neither makes nor loses money, not including commissions and fees.

Breakeven point = strike price of short put – net premium received

Bull Put Spread Example

A trader would like to use a bull put spread for XYZ stock since they think the price will slowly go up a month from now. XYZ is trading at $150 per share. The trader sells a put option for a premium of $3 with a strike price of $150. At the same time, they buy a put option with a premium of $1 and a strike price of $140 to limit their downside risk. Both put options have the same expiration date in a month.

The trader collects the difference between the two premiums, which is $2 ($3 – $1). Since each option contract is usually for 100 shares of stock, she’d collect a $200 premium when opening the bull put spread.

Maximum Profit

As long as XYZ stock trades at or above $150 at expiration, both puts will expire worthless, and the trader will keep the $200 premium received at the start of the trade, minus commissions and fees.

Maximum profit = $3 – $1 = $2 x 100 shares = $200

Maximum Loss

The trader will experience the maximum loss if XYZ stock trades below $140 at expiration, the lower strike price of the long leg of the trade. In this scenario, the trader will lose $800, plus commissions and fees.

Maximum loss = $150 – $140 – ($3 – $1) = $8 x 100 shares = $800

Breakeven

If XYZ stock trades at $148 at expiration, the trader will lose $200 from the short leg of the trade with the $150 stock price. However, this will be balanced out by the initial $200 premium they received when opening the position. The trader neither makes nor loses money in this scenario, not including commissions and fees.

Breakeven point = $150 – ($3 – $1) = $148

Bull Put Spread Exit Strategy

Often, trades don’t go as planned. If they did, trading would be easy, and everyone would succeed. It’s important for investors to consider how they might mitigate risk before they begin initiating a strategy, especially given the higher risk associated with options trading.

Having an exit strategy can help by providing a plan to cut losses at a predetermined point, rather than being caught off guard.

An exit strategy may be a little complicated for a bull put spread. Before the expiration date, you may want to exit the trade so you don’t have to buy an asset you may be obligated to purchase because you sold a put option. You may also decide to exit the position if the underlying asset price is falling and you want to limit your losses rather than take the maximum loss.

To close out a bull put spread entirely would require that the trader buy the short put contract to close and sell the long put option to close.

Recommended: Buy to Open vs Buy to Close

Pros and Cons of Bull Put Spreads

The following are some of the advantages and disadvantages of bull put spreads:

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Bull Put Spread Pros:

• Protection from downside risk; the maximum loss is known at the start of the trade

• The potential to profit from a modest decline in the price of the underlying asset price

• You can tailor the strategy based on your risk profile

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Bull Put Spread Cons:

• The gains from the strategy will be limited and may be lower than if the trader bought the underlying asset outright

• Maximum loss is usually more substantial than the maximum gain

• Difficult trading strategy for novice investors

Impacts of Variables

Several variables impact options prices, and options trading terminology describes how these variables might change in a given position.

Because a bull put spread consists of a short put and a long put, changes in certain variables can impact the position differently than other options positions. Here’s a brief summary.

1. Stock Price Change

A bull put spread does well when the underlying security price rises, making it a bullish strategy. When the price falls, the spread performs poorly. This is known as a position with a “net positive delta.” Delta is an options measurement that refers to how much the price of an option will change as the underlying security price changes. The ratio of a stock’s price change to an option’s price change is not usually one-to-one.

Because a bull put spread is made up of one long put and one short put, the delta often won’t change much as the stock price changes if the time to expiration remains constant. This is known as a “near-zero gamma” trade. Gamma in options trading is an estimation of how much the delta of a position will change as the underlying stock price changes.

2. Changes in Volatility

Volatility refers to how much the price of a stock might fluctuate in percentage terms across a specific timeline. Implied volatility (IV) is a variable in options prices. Higher volatility usually means higher options prices, assuming other factors stay the same. But a bull put spread changes very little when volatility changes, and everything else remains equal.

This is known as a “near-zero vega” position. Vega measures how much an option price will change when volatility changes, but other factors remain constant.

3. Time

Time decay refers to the fact that the value of an option declines as expiration draws near. The relationship of the stock price to the strike prices of the two put options will determine how time decay impacts the price of a bull put spread.

If the price of the underlying stock is near or above the strike price of the short put (the option with a higher strike price), then the price of the bull put spread narrows (allowing the trader to potentially profit) as time goes on. This occurs because the short put is closest to being in the money and falls victim to time decay more rapidly than the long put.

But if the stock price is near or below the long put’s strike price (the option with a lower strike price), then the value of the bull put spread widens (causing a loss) as time goes on. This occurs because the long put is closer to being in the money and will suffer the effects of time decay faster than the short put.

In cases where the underlying asset’s price is squarely in-between both strike prices, time decay barely affects the price of a bull put spread, as both the long and short puts will suffer time decay at more or less the same rate.

4. Early assignment

American-style options can be exercised at any time before expiration. Writers of a short options position can’t control when they might be required to fulfill the obligation of the contract. For this reason, the risk of early assignment (i.e., the risk of being required to buy the underlying asset per the option contract) must be considered when entering into short positions using options.

In a bull put spread, only the short put has early assignment risk because it represents the obligation to purchase the underlying asset. Early assignment of options usually has to do with dividends, and sometimes short puts can be assigned on the underlying stock’s ex-dividend date (the date someone has to start holding a stock if they want to receive the next dividend payment).

In-the-money puts with time value that doesn’t match the dividends of the underlying stock are likely to be assigned, as traders could earn more from the dividends they receive as a result of holding the shares than they would from the premium of the option.

For this reason, if the underlying stock price is below the short put’s strike price in a bull put spread, traders may want to contemplate the risk of early assignment. In cases where early assignment seems likely, using an exit strategy of some kind could be appropriate.

The Bottom Line

A bull put spread is one of four frequently used vertical options spreads that traders may use to try to benefit from the price movements of stocks or other assets. While the potential rewards of a bull put spread are limited, so too are its potential losses when the stock price moves in an unfavorable direction, which can make it a useful strategy for traders to have in their toolkit.

Trading options isn’t easy and can involve significant risk. Many variables are involved in options trading, some of which have been notorious for catching newbie traders by surprise. It’s important to consider your risk tolerance before initiating an options trade.

Explore SoFi’s user-friendly options trading platform.

Photo credit: iStock/kate_sept2004

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Mar

2025

How to Invest in Real Estate: 7 Ways for Beginners

By Rebecca Lake | Financial Independence, invest, Investing | Comments Off

Real estate investing can be an effective way to hedge against the effects of inflation in a portfolio while generating a steady stream of income. When it comes to how to invest in real estate, there’s no single path to entry.

Where you decide to get started can ultimately depend on how much money you have to invest, your risk tolerance, and how hands-on you want to be when managing real estate investments.

Key Points

• Real estate investing offers portfolio diversification and potential income generation.

• Benefits of real estate investing include hedging against inflation and potential tax breaks.

• Different ways to invest in real estate include REITs, real estate funds, REIT ETFs, real estate crowdfunding, rental properties, fix and flip properties, and investing in your own home.

• Each investment option has its own requirements, fees, holding periods, and risk factors.

• Consider your financial goals, risk tolerance, and available capital when deciding which real estate investment strategy is right for you.

Why Invest in Real Estate?

Real estate investing can yield numerous benefits, for new and seasoned investors alike. Here are some of the main advantages to consider with property investments.

• Real estate can diversify your portfolio, allowing you to better balance risk and rewards.

• Provides the opportunity to generate investment returns outside of owning securities such as stocks, ETFs, or bonds.

• Historically, real estate is often seen as a hedge against inflation, since property prices tend to increase in tandem with price increases for other consumer goods and services.

• Owning real estate investments can allow you to generate a steady stream of passive income in the form of rents or dividends.

• Rental property ownership can include some tax breaks since the IRS allows you to deduct ordinary and necessary expenses related to operating the property.

• Real estate may appreciate significantly over time, which could result in a sizable gain should you decide to sell it. However, real estate can also depreciate in value, leading to a possible loss or negative return. Investors should know that the real estate market is different than the stock market, and adjust their expectations accordingly.

There’s one more thing that makes real estate investing for beginners particularly attractive: There are many ways to do it, which means you can choose investments that are best suited to your needs and goals.

💡 Quick Tip: While investing directly in alternative assets often requires high minimum amounts, investing in alts through a mutual fund or ETF generally involves a low minimum requirement, making them accessible to retail investors.

Alternative investments,
now for the rest of us.

Explore trading funds that include commodities, private credit, real estate, venture capital, and more.

7 Ways to Invest in Real Estate

Real estate investments can take different forms, some of which require direct property ownership and others that don’t. As you compare different real estate investments, here are some important things to weigh:

• Minimum investment requirements

• Any fees you might pay to own the investment

• Holding periods

• Past performance and expected returns

• Investment-specific risk factors

With those things in mind, here are seven ways to get started with real estate investing for beginners.

1. Real Estate Investment Trusts (REITs)

A real estate investment trust (REIT) is a company that owns and operates income-producing properties. The types of properties you might find in a REIT include warehouses, storage facilities, shopping centers, and office space. A REIT may also own mortgages or mortgage-backed securities.

REITs allow investors to enjoy the benefits of property ownership without having to buy a building or land. Specifically, that means steady income as REITs are required to pay out 90% of taxable income annually to shareholders in the form of dividends. Most REIT dividends are considered to be ordinary income for tax purposes.

Many REITs are publicly traded on an exchange just like a stock. That means you can buy shares through your brokerage account if you have one, making it relatively easy to add REITs to your portfolio. Remember to consider any commission fees you might pay to trade REIT shares in your brokerage account.

2. Real Estate Funds

Real estate funds are mutual funds that own a basket of securities. Depending on the fund’s investment strategy, that may include:

• Individual commercial properties

• REITs

• Mortgages and mortgage-backed securities

Mutual funds also trade on stock exchanges, just like REITs. One of the key differences is that mutual funds are not required to pay out dividends to investors, though they can do so.

Instead, real estate funds aim to provide value to investors in the form of capital appreciation. A real estate fund may buy and hold property investments for the long term, in anticipation of those investments increasing in value over time.

Investing in a real estate fund vs. REIT could offer broader exposure to a wider range of property types or investments. A REIT, for instance, may invest only in hotels and resorts whereas a real estate mutual fund may diversify with hotels, office space, retail centers, and other property types.

3. REIT ETFs

A REIT ETF or exchange-traded fund is similar to a mutual fund, but the difference is that it trades on an exchange just like a stock. There’s also a difference between REIT ETFs and real estate mutual funds regarding what they invest in. With a REIT ETF, holdings are primarily concentrated on real estate investment trusts only.

That means you could buy a single REIT ETF and gain exposure to 10, 20 or more REITs in one investment vehicle.

Some of the main advantages of choosing a REIT ETF vs. real estate funds or individual REITs include:

• Increased tax efficiency

• Lower expense ratios

• Potential for higher returns

A REIT ETF may also offer a lower minimum investment than a REIT or real estate fund, which could make it suitable for beginning investors who are working with a smaller amount of capital.

But along with those advantages, investors should know about some of the potential drawbacks:

• ETF values may be sensitive to interest rate changes

• REIT ETFs may experience volatility related to property trends

• REIT ETFs may be subject to several other types of risk, such as management and liquidity risk more so than other types of ETFs.

As always, investors should consider the risks along with the potential advantages of any investment.

4. Real Estate Crowdfunding

Real estate crowdfunding platforms allow multiple investors to come together and pool funds to fund property investments. The minimum investment may be as low as $500, depending on which platform you’re using, and if you have enough cash to invest you could fund multiple projects.

Compared to REITs, REIT ETFs, or real estate funds, crowdfunding is less liquid since there’s usually a required minimum holding period you’re expected to commit to. That’s important to know if you’re not looking to tie up substantial amounts of money for several years.

You’ll also need to meet a platform’s requirements before you can invest. Some crowdfunding platforms only accept accredited investors. To be accredited, you must:

• Have a net worth over $1 million, excluding your primary residence, OR

• Have an income of $200,000 ($300,000 if married) for each of the prior two years, with the expectation of future income at the same level

You can also qualify as accredited if you hold a Series 7, Series 65, or Series 82 securities license.

5. Rental Properties

Buying a rental property can help you create a long-term stream of income if you’re able to keep tenants in the home. Some of the ways you could generate rental income with real estate include:

• Buying a second home and renting it out to long-term tenants

• Buying a vacation home and renting it to short-term or seasonal tenants

• Purchasing a multi-unit property, such as a duplex or triplex, and renting to multiple tenants

• Renting a room in your home

But recognize the risks or downsides associated with rental properties, too:

• Negative cash flow resulting from tenancy problems

• Problem tenants

• Lack of liquidity

• Maintenance costs and property taxes

Further, the biggest consideration with rental properties usually revolves around how you’re going to finance a property purchase. You might try for a conventional mortgage, an FHA loan if you’re buying a multifamily home and plan to live in one of the units, a home equity loan or HELOC if you own a primary residence, or seller financing.

Each one has different credit, income, and down payment requirements. Weighing the pros and cons of each one can help you decide which financing option might be best.

6. Fix and Flip Properties

With fix-and-flip investments, you buy a property to renovate and then resell it for (ideally) a large profit. Becoming a house flipper could be lucrative if you’re able to buy properties low, then sell high, but it does take some knowledge of the local market you plan to sell in.

You’ll also have to think about who’s going to handle the renovations. Doing them yourself means you don’t have to spend any money hiring contractors, but if you’re not experienced with home improvements you could end up making more work for yourself in the long run.

If you’re looking for a financing option, hard money loans are one possibility. These loans let you borrow enough to cover the purchase price of the home and your estimated improvements, and make interest-only payments. However, these loans typically have terms ranging from 9 to 18 months so you’ll need to be fairly certain you can sell the property within that time frame.

7. Invest in Your Own Home

If you own a home, you could treat it as an investment on its own. Making improvements to your property that raise its value, for example, could pay off later should you decide to sell it. You may also be able to claim a tax break for the interest you pay on your mortgage.

Don’t own a home yet? Understanding what you need to qualify for a mortgage is a good place to start. Once you’re financially ready to buy, you can take the next step and shop around for the best mortgage lenders.

How to Know If Investing in Real Estate Is a Good Idea for You

Is real estate investing right for everyone? Not necessarily, as every investor’s goals are different. Asking yourself these questions can help you determine where real estate might fit into your portfolio:

• How much money are you able and willing to invest in real estate?

• What is your main goal or reason for considering property investments?

• If you’re interested in rental properties, will you oversee their management yourself or hire a property management company? How much income would you need them to generate?

• If you’re considering a fix-and-flip, can you make the necessary commitment of time and sweat equity to get the property ready to list?

• How will you finance a rental or fix-and-flip if you’re thinking of pursuing either one?

• If you’re thinking of choosing REITs, real estate crowdfunding, or REIT ETFs, how long do you anticipate holding them in your portfolio?

• How much risk do you feel comfortable with, and what do you perceive as the biggest risks of real estate investing?

Talking to a financial advisor may be helpful if you’re wondering how real estate investments might affect your tax situation, or have a bigger goal in mind, like generating enough passive income from investments to retire early.

💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.

The Takeaway

Real estate investing is one of the most attractive alternative investments for portfolio diversification. While you might assume that property investing is only for the super-rich, it’s not as difficult to get started as you might think. Keep in mind that, depending on how much money you have to invest initially and the degree of risk you’re comfortable taking, you’re not just limited to one option when building out your portfolio with real estate.

Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.

Invest in alts to take your portfolio beyond stocks and bonds.

FAQ

How Can I Invest in Property With Little Money?

If you don’t have a lot of money to invest in property, you might consider real estate investment trusts or real estate ETFs for your first investments. REITs and ETFs can offer lower barriers to entry versus something like purchasing a rental property or a fix-and-flip property.

Is Real Estate Investing Worth It?

Real estate investing can be worth it if you’re able to generate steady cash flow and income, hedge against inflation, enjoy tax breaks, and/or earn above-average returns. Whether investing in real estate is worth it for you can depend on what your goals are, how much money you have to invest, and how much time you’re willing to commit to managing those investments.

Is Investing in Real Estate Better Than Stocks?

Real estate tends to have a low correlation with stocks, meaning that what happens in the stock market doesn’t necessarily affect what happens in the property markets. Investing in real estate can also be attractive for investors who are looking for a way to hedge against the effects of inflation over the long term.

Is Investing in Real Estate Safer Than Stocks?

Just like stocks, real estate investments carry risk meaning one isn’t necessarily safer than the other. Investing in both real estate and stocks can help you create a well-rounded portfolio, as the risk/reward profile for each one isn’t the same.

About the author

Rebecca Lake

Photo credit: iStock/Pheelings Media

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SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.

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What Is the Rule of 55? How It Works for Early Retirement

What Is the Rule of 55?

How Does the Rule of 55 Work?

Get a 1% IRA match on rollovers and contributions.

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.1

Rule of 55 Requirements

Example of the Rule of 55

Should You Use the Rule of 55?

Other Ways to Withdraw From a 401(k) Penalty-Free

The Takeaway

FAQ

Can I use the rule of 55 if I get another job?

How do I know if I qualify for Rule of 55?

How do I claim the rule of 55?

What is the rule of 55 lump sum?

Guide to Short Put Spreads

What Is a Short Put Spread?

How Short Put Spreads Work

Short Put Spread Example

Maximum Profit

Maximum Loss

Breakeven

Set-Up

Maintenance

Exit Strategy

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Impacts of Time, Volatility, and Price Change

Time

Volatility

Price

Pros and Cons of Short Put Spreads

Short Put Spread Pros:

Short Put Spread Cons:

Short Put Calendar Spreads

Alternatives to Short Put Spreads

Bull Put Spreads

Bear Put Spread

Call Spreads

The Takeaway

FAQ

Is a short put spread bullish or bearish?

How would you close a short put spread?

What does shorting a put mean?

What Is a Bull Put Credit Spread? Definition and Example

How a Bull Put Credit Spread Works

Profiting from a Bull Put Credit Spread

Maximum Gain, Loss, and Break-Even of a Bull Put Credit Spread

Example of a Bull Put Credit Spread

Scenario 1: Maximum Profit

Scenario 2: Maximum Loss

Scenario 3: Breakeven

Related Strategies: Bear Put Debit Spread

Bull Put Credit Spread Pros and Cons

Pros

Cons

The Takeaway

Bull Put Spread: How This Options Strategy Works

What Is a Bull Put Spread?

How a Bull Put Spread Works

Max Profit and Risk

Bull Put Spread Example

Maximum Profit

Maximum Loss

Breakeven

Bull Put Spread Exit Strategy

Pros and Cons of Bull Put Spreads

Bull Put Spread Pros:

Bull Put Spread Cons:

Impacts of Variables

1. Stock Price Change

2. Changes in Volatility

3. Time

4. Early assignment

The Bottom Line

How to Invest in Real Estate: 7 Ways for Beginners

Why Invest in Real Estate?

Alternative investments, now for the rest of us.

Explore trading funds that include commodities, private credit, real estate, venture capital, and more.

7 Ways to Invest in Real Estate

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