What this calculator solves
Debit spreads buy one option and sell another option farther out-of-the-money. The sold leg lowers cost, while the long-short strike width caps the profit potential.
Formula
For a debit spread, max loss is the net debit paid. Max profit is strike width minus net debit, multiplied by 100 and by contracts. Expiration P/L equals spread intrinsic value minus net debit.
Example
Buy the 100 call for $6 and sell the 110 call for $2. The net debit is $4, max loss is $400, and max profit is ($10 - $4) x 100 = $600 per spread.
Risk reminder
Defined risk does not mean easy execution. Spreads can be affected by wide markets, early assignment, pin risk near expiration, and poor liquidity in one leg.