Credit Spread Calculator

Price a vertical options credit spread. Enter the short and long strike prices, the net credit received, and the number of contracts to get max profit, max loss, breakeven price, and return on risk.

Quick Facts

Formula
Max profit = credit × 100 × contracts; Max loss = (width − credit) × 100 × contracts
Width is the distance between the short and long strike; 100 reflects shares per standard option contract.
Model
Vertical credit spread (bull put or bear call)
Risk is capped at trade entry; assumes standard equity option contracts held to expiration with no fees.

Your Results

Calculated
Max profit
-
Net credit × 100 × contracts
Max loss
-
(Strike width − credit) × 100 × contracts
Breakeven price
-
Underlying price at expiration for $0 P&L
Return on risk
-
Max profit ÷ max loss

Ready

Enter strikes, net credit, and contracts, then press Calculate.

How the Credit Spread Calculator works

This calculator prices a vertical option credit spread — selling one option and buying a further out-of-the-money option of the same type and expiration to cap risk while collecting a net premium. It applies the standard defined-risk math used for bull put and bear call spreads: strike width, net credit, max profit, max loss, breakeven, and return on risk.

The formula

For a short strike and long strike that are a strike width apart (the absolute difference between the two), and a net credit received per share:

Max profit = credit × 100 × contracts
Max loss = (strike width − credit) × 100 × contracts
Return on risk = max profit ÷ max loss × 100%

Breakeven price is the short strike − credit for a bull put spread, or the short strike + credit for a bear call spread. The 100 multiplier reflects the standard 100 shares controlled by one equity option contract. Both max profit and max loss are fixed the moment the trade is opened — they don't change as the underlying moves; only the position's current unrealized profit or loss along the way does.

Worked example

Sell a $95 put and buy a $90 put for a net credit of $1.50 per share (a bull put credit spread), one contract. The strike width is $5. Max profit is $1.50 × 100 × 1 = $150, the credit collected upfront. Max loss is ($5 − $1.50) × 100 × 1 = $350. Return on risk is $150 ÷ $350 ≈ 42.9%. Breakeven is $95 − $1.50 = $93.50: the underlying needs to stay above $93.50 at expiration for the trade to avoid a loss.

What moves the result most

  • Strike width: a wider spread raises max loss and lowers return on risk for the same credit, because more capital is put at risk to collect the same premium.
  • Net credit received: a higher credit relative to the width directly raises max profit and lowers max loss, improving return on risk — but a very high credit relative to width usually means the short strike sits closer to the money, which raises the odds of the underlying reaching it.
  • Number of contracts: scales max profit and max loss proportionally; it does not change the breakeven price or the return-on-risk percentage.

Bull put vs. bear call spreads

A bull put credit spread sells a higher-strike put and buys a lower-strike put — it profits if the underlying stays above the short put strike, a moderately bullish-to-neutral position. A bear call credit spread sells a lower-strike call and buys a higher-strike call — it profits if the underlying stays below the short call strike, a moderately bearish-to-neutral position. Both share the same max profit, max loss, and return-on-risk math; only the breakeven direction and the strikes' relationship to the current price differ. This calculator does not evaluate probability of profit, implied volatility, or time decay — it computes the fixed risk/reward defined by the strikes and the credit received.

Frequently Asked Questions

How is a credit spread's max profit and max loss calculated?
A credit spread's max profit is the net credit received: credit per share × 100 shares per contract × number of contracts, collected upfront when the trade is opened. Max loss is the strike width (the difference between the short and long strike) minus the credit received, again multiplied by 100 and the contract count. Both are fixed at trade entry because a vertical spread has one option sold and one option bought at a different strike on the same underlying and expiration.
What is the breakeven price for a credit spread?
For a bull put credit spread (selling a higher-strike put and buying a lower-strike put), breakeven is the short put strike minus the net credit received. For a bear call credit spread (selling a lower-strike call and buying a higher-strike call), breakeven is the short call strike plus the net credit received. Beyond breakeven, losses grow until they cap out at the strike width.
What is return on risk and why does it matter?
Return on risk is max profit divided by max loss, expressed as a percentage. It measures how much premium you're collecting relative to how much capital is at risk if the trade goes against you. A narrower spread usually raises return on risk but also raises the chance the short strike gets breached, since it sits closer to the underlying price.
Does this calculator account for probability of profit or time decay?
No. This calculator computes the defined max profit, max loss, and breakeven from strike prices and net credit alone — it does not model implied volatility, time decay, or the probability the underlying finishes beyond either strike. Those require an options-pricing model, such as Black-Scholes, and current market data, and should be evaluated separately before sizing a position.

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