Credit Spread Calculator
Calculate max profit, max loss, breakeven, and risk/reward for bull put and bear call credit spreads. Enter your strikes and premiums to evaluate the trade before placing it.
Enter your credit spread details above, then click Calculate Credit Spread to see max profit, max loss, breakeven, and risk/reward.
For educational purposes only. Not financial advice. Read full disclaimer
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Credit Spread Formulas
Net Credit = Short Premium - Long Premium
Width = |Short Strike - Long Strike|
Max Profit = Net Credit x 100 x Contracts
Max Loss = (Width - Net Credit) x 100 x Contracts
Breakeven (Bull Put) = Short Strike - Net Credit
Breakeven (Bear Call) = Short Strike + Net Credit
Return on Risk = (Max Profit / Max Loss) x 100
Worked Examples
Example 1: Bull Put Credit Spread on SPY
SPY is at $450. You sell the 445 put for $3.00 and buy the 440 put for $1.50 (1 contract).
- Net Credit = 3.00 - 1.50 = $1.50 per share ($150 total)
- Width = 445 - 440 = $5
- Max Profit = 1.50 x 100 = $150
- Max Loss = (5 - 1.50) x 100 = $350
- Breakeven = 445 - 1.50 = $443.50
- Return on Risk = 150 / 350 x 100 = 42.9%
Example 2: Bear Call Credit Spread on AAPL
AAPL is at $175. You sell the 180 call for $2.50 and buy the 185 call for $1.00 (2 contracts).
- Net Credit = 2.50 - 1.00 = $1.50 per share ($300 total)
- Width = |180 - 185| = $5
- Max Profit = 1.50 x 100 x 2 = $300
- Max Loss = (5 - 1.50) x 100 x 2 = $700
- Breakeven = 180 + 1.50 = $181.50
- Return on Risk = 300 / 700 x 100 = 42.9%
How to Use This Calculator
- Choose your direction — Bull Put for bullish bias, Bear Call for bearish bias.
- Enter the short strike — the strike of the option you are selling (higher premium).
- Enter the long strike — the strike of the option you are buying for protection.
- Enter both premiums — the per-share price for each leg.
- Set the number of contracts — each contract covers 100 shares.
- Click Calculate Credit Spread — review max profit, max loss, breakeven, and return on risk.
Frequently Asked Questions
- What is a credit spread?
- A credit spread is a two-leg options strategy where you sell a higher-premium option and buy a lower-premium option at a different strike, both with the same expiration. You collect a net credit upfront. The trade profits when the underlying stays away from the long strike, letting both options expire worthless or near-worthless.
- What is the difference between a bull put spread and a bear call spread?
- A bull put spread sells a higher-strike put and buys a lower-strike put — it profits when the stock stays above the short put strike. A bear call spread sells a lower-strike call and buys a higher-strike call — it profits when the stock stays below the short call strike. Both are credit spreads with defined risk.
- Why would I use a credit spread instead of selling a naked option?
- A credit spread limits your maximum loss to the spread width minus the credit received, while a naked option has potentially unlimited risk (for calls) or large risk (for puts). Credit spreads also require significantly less buying power and margin than naked positions.
- How does time decay help a credit spread?
- Time decay (theta) works in your favor because you are a net seller of premium. As expiration approaches, the extrinsic value of both options decays, but the short option decays faster if it is closer to the money. This lets you buy back the spread for less than you sold it, or let it expire worthless.
- When should I close a credit spread early?
- Many traders close credit spreads when they reach 50-75% of max profit. This locks in most of the gain while avoiding the gamma risk of the final days before expiration. You should also consider closing early if the underlying moves sharply against you to limit losses before max loss is reached.