Credit Spread Calculator
Defined-risk spread math: profit, loss, breakeven, return on risk.
P&L at expiry for tested price
Estimates for planning only, not financial advice.
A credit spread caps both your gain and your pain: sell one option, buy a further one as insurance, keep the net premium. With a $100/$95 bull put spread, selling the $100 put for $4 and buying the $95 put for $2, the net credit is $2 per share ($200 per contract), max loss is $3 per share ($300), and breakeven is $98. Enter your strikes and premiums to get max profit, max loss, breakeven, return on risk, and the P&L at any expiry price.
How to Use This Calculator
Pick bull put (bullish to neutral) or bear call (bearish to neutral) and your contract count. Enter the short strike (closer to the stock) and long strike (further out), then each leg\'s premium per share. Enter the stock price at expiry you want to test. The calculator returns the structure\'s max profit, max loss, breakeven, return on risk, probability-friendly width analysis, and your P&L at the tested price.
Choose spread direction matching your view: bull put for up-or-flat, bear call for down-or-flat.
Enter strikes and premiums. Wider spreads collect more credit against more risk.
Test expiry prices around the short strike. If the loss case exceeds 2x the credit, narrow the spread or skip the trade.
The Spread Formulas
The breakeven hugs the short strike because the credit is a fraction of the width: you profit across most outcomes and lose badly in the tail. That asymmetry is the trade\'s character: high win probability, poor payout ratio. It works when the stock cooperates more often than the payout ratio demands. A 66% return on risk needs a win rate above 60% to profit long-term, which is achievable but not automatic.
Worked Example
Bull put spread on a $102 stock: sell the $100 put for $4.00, buy the $95 put for $2.00. Net credit: $2.00 per share, $200 per contract. Max loss: ($100 - $95) - $2.00 = $3.00 per share, $300 per contract. Breakeven: $98. Return on risk: $200/$300 = 66.7%. At expiry with the stock at $102: both puts expire worthless, keep the full $200. At $97: the $100 put is worth $3.00 against your $2.00 credit, a $1.00 per-share ($100) loss. At $93: max loss of $300. The trade wins on any close above $98 and loses below, with the worst case known to the penny before entry.
Spread Width Trade-offs
| Width | Credit | Max loss | Character |
|---|---|---|---|
| Narrow ($2-3) | Small | Small | High probability, low payout |
| Medium ($5) | Moderate | Moderate | Balanced risk-reward |
| Wide ($10+) | Large | Large | Approaches naked short risk |
Width choice is risk-tolerance choice: narrow spreads are frequent small wins, wide spreads are concentrated bets. Whatever the width, size positions so the max loss is an acceptable fraction of the account: risking 2% to 5% per trade keeps a string of losses survivable. For single-leg math, our call and put calculator prices each leg, and for the time-value concepts behind spread pricing, our present value calculator covers discounting.
Estimates for planning only, not financial advice.
Frequently Asked Questions
What is a credit spread in options?
A credit spread sells one option and buys a further out-of-the-money option of the same type and expiry, collecting a net premium. A bull put spread sells the $100 put and buys the $95 put; a bear call spread sells the $100 call and buys the $105 call. The long option caps the loss, making the trade defined-risk: you know the worst case before entering.
How do you calculate max profit on a credit spread?
Max profit is the net credit received: (short option premium - long option premium) x 100 per contract. Sell the $100 put for $4.00 and buy the $95 put for $2.00: net credit is $2.00 per share, $200 per contract. You keep it all if both options expire worthless, which happens when the short strike is never breached.
How do you calculate max loss on a credit spread?
Max loss is the spread width minus the net credit: ($100 - $95) - $2.00 = $3.00 per share, $300 per contract. It occurs if the stock blows through both strikes. The long option is what defines the risk: without it, the short put's loss would be far larger. Defined risk is the entire point of the structure.
What is the breakeven on a bull put spread?
The short strike minus the net credit: $100 - $2.00 = $98. Above $98 at expiry you profit (fully above $100); below $98 you lose (fully below $95). For a bear call spread it mirrors: short strike plus net credit. Breakeven sits close to the short strike because the credit is small relative to the width, which is why these are high-probability, low-payout trades.
What is return on risk for a credit spread?
Max profit divided by max loss: $200 / $300 = 66.7% in the example. It is the trade's risk-reward expressed as a yield if everything goes right. Wider spreads raise both the credit and the risk; the return on risk is usually best at moderate widths. Compare it against your win rate: a 70% win rate at 66% return-on-risk is profitable, at 20% it is not.
When should I close a credit spread early?
Common practice: take profit at 50% of max (the remaining premium decays slowly relative to the risk retained), and cut losses if the short strike is breached or the loss hits 1.5x to 2x the credit received. Holding to expiry maximizes theoretical profit but keeps gamma risk into the final days, when small stock moves swing the spread's value violently.
What is the difference between a credit and debit spread?
A credit spread collects premium upfront and profits from time decay and the stock staying put: you want boredom. A debit spread pays premium upfront and profits from directional movement: you want action. Credits offer high win rates with capped payouts; debits offer lower win rates with better payouts. Choose by your market view, not by which sounds safer.
How does implied volatility affect credit spreads?
High IV inflates both premiums, usually widening the net credit more than the risk, which improves the entry. That is why credit spreads are popular in high-IV environments: you are selling expensive insurance. The danger is that high IV often precedes real moves, so the short strike gets tested more often. Sell spreads on high IV, but respect position sizing.
What happens if the stock is between the strikes at expiry?
The short option has intrinsic value and the long option is worthless or partially valuable; your P&L lands between max profit and max loss linearly. At $97.50 in the example (midpoint of the $95/$100 puts), the $100 put is worth $2.50 against your $2.00 credit: a $0.50 per-share loss. Pin risk near the long strike at expiry is the awkward zone; many traders close before expiry to avoid it.
Can I lose more than the max loss shown?
In normal exercise and assignment, no: the structure defines it. The edge cases are early assignment on the short leg (manageable: exercise the long leg in response) and holding through expiry with the stock near a strike (pin risk, where after-hours moves create surprises). Close or roll spreads before expiry week and these stay theoretical.