There are a variety of ways to hedge. Let's tackle one as an example. Suppose XYZ is $50, it's Nov expiration, the one month Dec $50 put is $1.50 and the Dec $48 put is $0.50. The bullish vertical nets $1 and has a risk of $1. Doing 5 of them provides a $500 credit which is the potential gain at/above $50 and a potential loss of $500 at/below $48. Now suppose we want to reduce the delta risk a bit and buy 7 $48 calls instead of 5. That reduces the net credit to $400 and at $48, the maximum loss is increased to $600. Adding the hedge worsened the R/R in the $2 range of the vertical. It hindered, not helped on an expiration basis. However, the are two other important factors with the -5/+7 ratio spread. If XYZ collapses, for every $1 drop below $48, you'll make $7 for every $5 that you lose. With a loss of max $600 at $48, you'll break even at $45 and below $45, you make $2 per add'l point of loss in the underlying. Now that's an unexpected bad collapse that you can live with. The second factor is that if the collapse occurs well before expiration, the delta of the 7 long puts will overcome the short 5 puts a bit sooner and the break even will be a bit higher. Going a bit off the reservation: If you choose to defend, you can roll the long $48 puts down, booking some of their gain. This adds add'l risk but you can bump up the ratio a little and restore some long delta. Let's say -5/+9 now. Additional collapse is now +$4 per point of drop and any large rebound puts a lot of short $50 put intrinsic back into your pocket. And if you really want to get aggressive, sell high $40's short calls or bearish call spreads against the whole mess, creating another offsetting income stream. Warning: this approach hurts if the stock trades in a box and long premium decays. The short answer? Hedging like this may help or hurt, depending on what the underlying does.
As beerntrading stated, the index hedging will not help you if the bad news is stock specific and only drops it. It will help with broad based decline.
Back to original question - If I set up a hedge by buying a bear put spread above the bull put spread - how does that scenario play out - ratio probably like so - stock $260 +1 255 - $6 -6 250 - $4 +5 245 - 2.50 6 weeks out target. for total premium: -600+2400-1250=550 against expiry risk of 2000-550 prem = 1450. 550/1450 = .379 R/R It seems if you drop to the short puts, your loss would be far smaller than if you only had the bull spread on: premium 750 vs. total loss of 2500-750(prem) = 1750. 750/1750=.42 R/R. So the unhedged is slightly better R/R, but the hedged gives a lower B/E point at $247.70ish vs 248.50. You can also increase the ratio to get equal R/R. The hedged also gives additional profit between 255 and 250. It further increases its protective ability the closer to expiration we are because of contracting deltas.
Getting a fill on that might be difficult unless you're legging in, so you'd need to factor that into risk / reward. Also, a blowout is still a blowout with that, so if you have 100% of capital committed and the whole market tanks, you're in the same place. Furthermore, you furthest ITM strike is likely to have wide spreads with the volatility that such a move would bring with it. And, that's just a butterfly (the specific word for it is escaping me at the moment).
The short answer is that your single bearish $255/250 put spread costs $2 and can make $3 so if the underlying stays up, your combined position does $2 worse and if it drops, you can achieve a maximum of $3 less loss. All your hedge is doing is shifting the BE and R/R a bit.