Vertical spreads
How do I calculate the Maximum Profit, Maximum Loss, and Breakeven for a vertical credit spread?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
For a vertical credit spread, maximum profit equals the net credit received, maximum loss equals the strike width minus that credit, and breakeven is the short strike adjusted by the credit amount in the direction away from maximum loss.
How it works
These calculations let traders evaluate risk-to-reward before entering a trade, since both the best and worst outcomes are fixed by the chosen strikes and the premium collected at entry.
An example
A $5-wide put credit spread sold for $1.50 has a maximum profit of $150, maximum loss of $350, and a breakeven at the short strike minus $1.50 per contract.
Risk & limitations
OIC notes these figures exclude commissions and assignment-related complications, which can alter the realized outcome slightly from the theoretical calculation.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.