Bull Put spreads are generally applied in a bullish trend, hence the term "bull", using a short put to define the expected support level. Support is the value used to define a price at which share value is expected to be at or higher than at the options expiration. So if you have a February 50 short put your expectation is that share value will be at or greater than 50 by the 3rd Friday in February.
The short put can be written in the money (NYSEARCA:ITM), at the money (ATM), or out of the money (OTM), and the expectation would remain that share value should be at or greater than the short put strike to maximize reward. As a result the Bull Put strategy optimizes a bullish trend or a stagnant trend. The stagnant trend is optimized if the short options is written ATM or OTM - share value could remain flat and the trade will still optimize reward. In addition, based on time-decay the short option value erodes, so even if the short strike is written ITM, extrinsic value will erode as time decays and the short option or bull put spread can still generate a return simply on the erosion of time/extrinsic value.
There are applications of the Bull Put where it can optimize a bearish trend based on initiating long term and the short option is assigned. It's a bit more complex but is an effective way of owning shares of an underlying asset at wholesale values or simply to book profits before the options are scheduled to expire. Gobulls.co.il provides webinars to illustrate this application.
Generally, you'll want to use the Bull Put in a bullish trend, so the short put instrument should be written at a good level of support so that it is more likely to expire worthless. A long put is purchased at a lower strike price to minimize risk so if you have a 50 short put and a 45 long put your risk is the difference in the strikes minus the credit/reward of the trade - in this case the risk would be no greater than 5.
Let's assume you sell (short) a put at 50 that gives you a premium of 3.00 and then buy a 45 long put for 2.00. The credit/reward of the trade is 3 minus 2 which equals 1.00 dollar. Risk would be the difference in the spread of the strikes, 50 - 45 = 5, minus the credit, 5 - 1, so the risk would be 4. Return on invested risk is 25% (1 divided by 4 mutliplied by 100).
Follow this recent trade, initiated today for February to see how the trade works:AMZN February 120/115 bull put. Credit was .76, Risk is 4.24. Return on risk is 18% and matures in 3 weeks.
Disclosure: Bull put spread in Feb on AMZN