Vertical spread max loss calculator: the worst day, set before you trade
A vertical spread has a top and a bottom. Enter the width and what you paid or got to see both ends in dollars.
How it works: a vertical spread has a fixed top and a fixed bottom. The width is the gap between the two strikes. For a credit spread: most you can gain = credit × shares; most you can lose = (width − credit) × shares. For a debit spread: most you can lose = debit × shares; most you can gain = (width − debit) × shares. Shares = contracts × shares per contract. Fees are left out.
The loss is set before you trade
In the default you took a $1.50 credit on a $5 wide spread, two contracts. You can gain at most $300. You can lose at most $700. That is the worst day, and it is known from the start. A credit spread risks more than it can make whenever the credit is under half the width.
A debit spread flips it. The most you can lose is what you paid. See vertical spread and debit spread versus credit spread.
The usual mix-up
The credit is not the amount at risk. The width is the cap on the move, and the credit only offsets part of it. Vertical spreads, explained walks through both sides.
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