Options Credit Spread Calculator
Calculate the maximum profit, maximum loss, and breakeven price for bull put and bear call credit spread options strategies.
How to use this tool
- Enter spread type, short strike price, long strike price, net premium received and number of contracts in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your maximum profit and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Spread Width: W = |Short Strike − Long Strike|
Maximum Profit: Net Premium × 100 × Contracts
Maximum Loss: (W − Net Premium) × 100 × Contracts
Breakeven (Bull Put): Short Strike − Net Premium
Breakeven (Bear Call): Short Strike + Net Premium
How it works
A credit spread is an options strategy where the trader simultaneously sells one option and buys another of the same type at a different strike price, collecting a net premium upfront. The bought option caps the maximum loss, defining the risk as the spread width minus the premium received.
Maximum profit occurs when both options expire worthless (for a bull put spread, the underlying stays above the short strike; for a bear call spread, it stays below). Maximum loss occurs when the underlying moves through both strikes at expiration. Each standard equity options contract covers 100 shares.
Worked example
Bull Put Spread: Sell $50 put, Buy $45 put, receive $2.00 premium
- Spread width = $50 − $45 = $5.00
- Maximum profit = $2.00 × 100 × 1 contract = $200
- Maximum loss = ($5.00 − $2.00) × 100 × 1 = $300
- Breakeven = $50 (short strike) − $2.00 (premium) = $48.00
Maximum profit is $200, maximum loss is $300, and the breakeven price is $48.00.
Common mistakes to avoid
- Calculating maximum loss as the full spread width rather than spread width minus net premium received, overstating risk by ignoring the premium that reduces downside.
- Forgetting to multiply net premium and loss figures by 100 (the contract multiplier) and by the number of contracts, giving results off by a large factor.
- Confusing bull put spreads (sell put, buy lower put) with bear call spreads (sell call, buy higher call), which reverses the market direction bias of the trade.
Key terms
- Credit Spread
- An options strategy that generates a net premium income by selling a closer-to-the-money option and buying a further-out-of-the-money option of the same type.
- Short Strike
- The strike price of the option that is sold, which generates premium income.
- Breakeven Price
- The underlying asset price at which the strategy results in neither a profit nor a loss at expiration.
- Return on Risk
- The maximum profit divided by the maximum loss, expressed as a percentage, indicating the reward relative to the capital at risk.
Frequently asked questions
- What is the maximum profit on a credit spread?
- Maximum profit equals net premium received x 100 x contracts. This is achieved when both options expire worthless -- for a bull put spread, when the underlying stays above the short put strike at expiration.
- When does a bull put spread reach maximum loss?
- Maximum loss occurs when the underlying falls below the long put strike at expiration. Both options are in the money; the spread is worth its full width, and the loss equals (Spread Width - Net Premium) x 100 x Contracts.
- How do I choose strike prices for a credit spread?
- Traders typically sell the strike closest to the current price they are comfortable defending (the short strike sets the breakeven) and buy a further out-of-the-money strike to cap risk. A wider spread collects more premium but carries greater maximum loss.