Also called a 'bull put spread' or 'credit put spread'. You sell a put at a higher strike and buy a put at a lower strike for protection. You profit if the stock stays above the short put strike. Like a cash-secured put but with defined risk.
Net premium received
Difference between strikes - Net premium received
Higher strike - Net premium received
Short 1 higher-strike Put + Long 1 lower-strike Put (same expiry)
Limited profit (premium). Limited, defined risk.
When you expect the stock to stay flat or rise. When you want defined-risk income generation. Popular as an alternative to cash-secured puts.