What is an Options Spread?
A vertical options spread combines buying one option and selling another option of the same type (both calls or both puts) with the same expiration but different strike prices. Spreads cap both potential profit and potential loss compared to a single outright option.
The Formula
The net debit (or credit) is the premium paid minus premium received, multiplied by 100 shares per contract and the number of contracts. Maximum loss on a debit spread is the net debit paid; maximum profit is the strike width minus the net debit. For a credit spread, these roles reverse. Breakeven for a call spread is the long strike plus the net debit paid.
Note: This calculator is for general educational purposes only and is not investment advice; options trading involves substantial risk.