FXZ Bear Put Spread Strategy
FXZ (First Trust Materials AlphaDEX Fund), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The First Trust Materials AlphaDEX Fund is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuant Materials Index.
FXZ (First Trust Materials AlphaDEX Fund) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $230.1M, a beta of 1.01 versus the broader market, a 52-week range of 53.16-82.58, average daily share volume of 55K, a public-listing history dating back to 2007. These structural characteristics shape how FXZ etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.01 places FXZ roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. FXZ pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a bear put spread on FXZ?
A bear put spread buys an at-the-money put and sells an out-of-the-money put at a lower strike for defined risk and defined reward bounded by the strike width.
Current FXZ snapshot
As of May 15, 2026, spot at $78.64, ATM IV 25.00%, IV rank 3.79%, expected move 7.17%. The bear put spread on FXZ below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 63-day expiry.
Why this bear put spread structure on FXZ specifically: FXZ IV at 25.00% is on the cheap side of its 1-year range, which favors premium-buying structures like a FXZ bear put spread, with a market-implied 1-standard-deviation move of approximately 7.17% (roughly $5.64 on the underlying). The 63-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated FXZ expiries trade a higher absolute premium for lower per-day decay. Position sizing on FXZ should anchor to the underlying notional of $78.64 per share and to the trader's directional view on FXZ etf.
FXZ bear put spread setup
The FXZ bear put spread below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With FXZ near $78.64, the first option leg uses a $80.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FXZ chain at a 63-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 FXZ shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Put | $80.00 | $3.70 |
| Sell 1 | Put | $75.00 | $1.78 |
FXZ bear put spread risk and reward
- Net Premium / Debit
- -$192.50
- Max Profit (per contract)
- $307.50
- Max Loss (per contract)
- -$192.50
- Breakeven(s)
- $78.08
- Risk / Reward Ratio
- 1.597
Max profit equals strike width minus net debit times 100; max loss equals net debit times 100. Breakeven is long-put strike minus net debit.
FXZ bear put spread payoff curve
Modeled P&L at expiration across a range of underlying prices for the bear put spread on FXZ. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | +$307.50 |
| $17.40 | -77.9% | +$307.50 |
| $34.78 | -55.8% | +$307.50 |
| $52.17 | -33.7% | +$307.50 |
| $69.56 | -11.6% | +$307.50 |
| $86.94 | +10.6% | -$192.50 |
| $104.33 | +32.7% | -$192.50 |
| $121.72 | +54.8% | -$192.50 |
| $139.10 | +76.9% | -$192.50 |
| $156.49 | +99.0% | -$192.50 |
When traders use bear put spread on FXZ
Bear put spreads on FXZ reduce the cost of a bearish FXZ etf position by selling a lower-strike put; suited to moderate-decline theses where price reaches but does not vastly exceed the short strike.
FXZ thesis for this bear put spread
The market-implied 1-standard-deviation range for FXZ extends from approximately $73.00 on the downside to $84.28 on the upside. A FXZ bear put spread caps both the risk and the reward of a bearish position; relative to an outright long put on FXZ, the spread reduces the cost basis but limits the maximum profit to the strike width minus net debit. Current FXZ IV rank near 3.79% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on FXZ at 25.00%. As a Financial Services name, FXZ options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FXZ-specific events.
FXZ bear put spread positions are structurally moderately bearish; the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. FXZ positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FXZ alongside the broader basket even when FXZ-specific fundamentals are unchanged. Long-premium structures like a bear put spread on FXZ are particularly exposed to IV-crush risk through scheduled events (earnings, FDA decisions, central-bank meetings) where IV typically contracts post-event regardless of the directional outcome. Always rebuild the position from current FXZ chain quotes before placing a trade.
Frequently asked questions
- What is a bear put spread on FXZ?
- A bear put spread on FXZ is the bear put spread strategy applied to FXZ (etf). The strategy is structurally moderately bearish: A bear put spread buys an at-the-money put and sells an out-of-the-money put at a lower strike for defined risk and defined reward bounded by the strike width. With FXZ etf trading near $78.64, the strikes shown on this page are snapped to the nearest listed FXZ chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FXZ bear put spread max profit and max loss calculated?
- Max profit equals strike width minus net debit times 100; max loss equals net debit times 100. Breakeven is long-put strike minus net debit. For the FXZ bear put spread priced from the end-of-day chain at a 30-day expiry (ATM IV 25.00%), the computed maximum profit is $307.50 per contract and the computed maximum loss is -$192.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FXZ bear put spread?
- The breakeven for the FXZ bear put spread priced on this page is roughly $78.08 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current FXZ market-implied 1-standard-deviation expected move is approximately 7.17%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a bear put spread on FXZ?
- Bear put spreads on FXZ reduce the cost of a bearish FXZ etf position by selling a lower-strike put; suited to moderate-decline theses where price reaches but does not vastly exceed the short strike.
- How does current FXZ implied volatility affect this bear put spread?
- FXZ ATM IV is at 25.00% with IV rank near 3.79%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.