Understand the position
Sell the $105 call for $3 and buy the $115 call for $1. The net credit is $2 per share, or $200. Strike width is $10, so maximum expiration loss is ($10 − $2) × 100 = $800; break-even is $107 before costs.
A bull-put credit spread sells a higher-strike put and buys a lower-strike put. A hypothetical $95/$85 put spread collecting $2 has maximum profit $200, maximum loss $800 and break-even $93. Its favorable direction is upward or stable rather than downward or stable.
Read the payoff and try a scenario
Bear call credit spread: profit and loss at expiration
- Sell the $105 call for $3; buy the $115 call for $1. Same expiration; $2 net credit.
- Expiration break-even stock price: $107 before costs.
- The plot displays $70–$130 only. Move the control to $0 to examine a stock collapse; the right edge is not an upside bound.
Read the chart data
| Stock price at expiration · USD | Whole position P/L (Net P/L · USD per share) |
|---|---|
| 70 | 2 |
| 80 | 2 |
| 90 | 2 |
| 100 | 2 |
| 105 | 2 |
| 107 | 0 |
| 110 | -3 |
| 115 | -8 |
| 120 | -8 |
| 130 | -8 |
One contract per option leg; 100 shares where the strategy includes stock. Read the fixed position above before changing the price.
For the call example, stock $100 leaves both calls without intrinsic value and the spread earns the $200 credit. At $110, the short call owes $5 and the long call has zero intrinsic value, producing a $300 net loss. At $115 or higher, the intact spread reaches its $800 maximum expiration loss.
Separate expiration economics from live prices
The diagram calculates net profit or loss at expiration with the specified position intact. Before that date, remaining time, implied volatility, rates, dividends and bid–ask spreads affect each leg’s market value. A break-even shown here is an expiration break-even, not the price at which an early closing trade must be profitable.
For an actual position, calculate net execution costs and contract quantities, and verify every leg’s expiration, underlying and deliverable. The examples use one standard 100-share contract per leg. Adjusted contracts can differ; an incomplete or mismatched hedge changes the risk.
Understand the tradeoffs and obligations
A high proportion of small favorable outcomes can coexist with occasional large losses. Five $200 gross wins followed by one $800 gross loss leave $200 before costs; changing those frequencies can readily erase the result. A diagram gives magnitudes, not probabilities.
Assignment on the short leg can produce stock exposure or funding needs before the long leg offsets it. Holding through expiration near a strike introduces uncertainty about which options exercise. The advertised maximum applies to the intended intact structure, not every possible operational sequence.
Is the $200 credit the maximum amount that can be lost?
Show the explanation
No. The example’s $10 width less $2 credit creates $8 per share of maximum expiration loss, or $800 before costs for an intact spread.
Sources and editorial notes
Original explanations and hypothetical examples prepared with AI assistance. Primary reference check dates are listed below. Numerical examples are hypothetical unless explicitly identified otherwise.
- OCC / OIC: Bear Call Spread
Position construction and risk tradeoffs. All premiums, strikes, payoff graphics, practice questions and calculations are original fictional examples, not copied charts or performance results. Checked October 17, 2026.
- FINRA / OCC: Understanding Assignment
Exercise, assignment, after-hours risk and broker cutoff considerations. Strategy diagrams assume intact matching positions through settlement. Checked October 17, 2026.