What Is the Purpose of a “Put Spread” in Managing Tail Risk?

A put spread, specifically a long put spread (buying a high-strike put and selling a lower-strike put), is used to reduce the cost of a protective put hedge while still providing significant downside protection. The sold put reduces the net premium, but it caps the maximum profit of the hedge.

It is a cost-effective way to hedge moderate tail risk, but it does not protect against the most extreme downside.