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.
