Debit Spread Calculator
A debit spread buys an option and sells a further-out option to cut the cost. It’s a defined-risk directional bet: you know your max loss (the debit) and max gain up front.
Above long strike = call spread; below = put spread.
Max Profit
$650.00
Max Loss
$350.00
the debit paid
Breakeven
$103.50
Max Return
185.7%
Profit / Loss at Expiration
Assumptions & limitations
- Premiums are quoted per share; results use the standard 100-share contract multiplier.
- P&L is at expiration — early assignment, commissions, and taxes are not modeled.
Debit spread payoff
Max Profit = (Width − Debit) × 100 Max Loss = Debit × 100Breakeven is the long strike plus the debit (calls) or minus the debit (puts). Return % = max profit / debit.
How It Works
- 1Buying the near strike gives you the directional exposure; selling the far strike subsidizes the cost.
- 2Full profit requires the stock beyond the short strike at expiration.
- 3Compared with a naked long option, spreads reduce cost and theta decay in exchange for capped upside.
Frequently Asked Questions
Debit spread vs. buying a call outright?
The spread costs less and suffers less time decay, but caps your gain. Naked calls win big only on large, fast moves.
What width should I trade?
Wider spreads behave more like a single option (higher cost, higher potential); narrow spreads are cheaper, binary bets. $5–$10 widths are common on liquid names.
Should I hold to expiration?
Most traders exit at 50–75% of max profit. Holding to the end risks pin risk and assignment complications around the short strike.