Max profit and max loss: the spread-math cheat sheet

Two formulas. That's the whole game.

All four vertical spreads share one common skeleton, and that skeleton gives you exactly two equations to know. We'll write them with stock-price-style numbers (the per-share amount), then multiply by 100 at the end to convert to per-contract dollars. Spread width = the dollar gap between the two strikes. Debit = money you paid. Credit = money you received. With those three terms, the math falls out automatically.

Debit spreads (bull call, bear put): Max loss = debit. Max profit = width − debit. You can never lose more than you paid, because the only money you put up front IS the debit. And the most you can make is the full width of the spread, minus the cost basis. If you bought a $5-wide spread for $1.80, your max profit is $3.20 and your max loss is $1.80. Multiply by 100 for per-contract dollars: +$320 best case, −$180 worst case.

Credit spreads (bull put, bear call): Max profit = credit. Max loss = width − credit. You can never make more than you collected up front, because that's already in your account. And the most you can lose is the width of the spread, minus what you collected. If you sold a $5-wide spread for $1.20 credit, your max profit is $1.20 and your max loss is $3.80. Per contract: +$120 best, −$380 worst.

Sanity check: in both examples above, profit + loss = spread width. $3.20 + $1.80 = $5.00. $1.20 + $3.80 = $5.00. Every vertical spread you ever look at will obey this. If it doesn't, the quote is off — usually slippage on a wide bid-ask. Use the rule as a smell test: does best-case-plus-worst-case match the strike gap? If yes, the math is consistent. If no, dig deeper.

Recap: debit spread max loss = debit, max profit = width − debit. Credit spread max profit = credit, max loss = width − credit. Multiply per-share numbers by 100 for per-contract dollars. Profit + loss = width. Memorize this.