Four vertical spread options structures, one expiration
A vertical spread pairs one long option with one short option on the same underlying, using the same option type, expiration and contract size but different strikes. Bull call and bull put spreads express a bullish view; bear put and bear call spreads express a bearish view. The debit or credit describes the entry cash flow, not a probability of success.
In this table, W is the higher strike minus the lower strike. D is the net premium paid; C is the net premium received. All formulas are per share at expiration, before fees, with both legs maintained and settled as assumed. Multiply by 100 for one standard stock-option spread. The short-leg risks describe physically settled American-style stock options.
| Structure | Legs | Entry | Max profit | Max loss | Breakeven | Early assignment exposure |
|---|---|---|---|---|---|---|
| Bull call spread | Buy lower call; sell higher call | Pay debit D | W − D | D | Lower strike + D | Short higher call: stock delivery risk, especially around ex-dividend dates. |
| Bear put spread | Buy higher put; sell lower put | Pay debit D | W − D | D | Higher strike − D | Short lower put: assignment can create a long stock position. |
| Bull put spread | Buy lower put; sell higher put | Receive credit C | C | W − C | Higher strike − C | Short higher put: assignment can require cash to purchase stock. |
| Bear call spread | Buy higher call; sell lower call | Receive credit C | C | W − C | Lower strike + C | Short lower call: assignment can create a short stock position. |
Sources: OIC's bull call, bear put, bull put and bear call strategy references.
Worked example: a $5-wide spread
Assume one hypothetical 100/105 call spread, with both legs expiring on the same date. Buy the 100 call for $4.20 and sell the 105 call for $1.70. The bull call debit is $2.50 per share ($250 per spread); maximum profit is (105 − 100 − 2.50) × 100 = $250, maximum loss is $250, and breakeven is $102.50. These are illustrative premiums, not market quotes.
| Underlying at expiry | Long call value | Short call liability | Spread P&L × 100 |
|---|---|---|---|
| $98 | $0 | $0 | −$250 |
| $102.50 | $2.50 | $0 | $0 |
| $103 | $3 | $0 | $50 |
| $110 | $10 | $5 | $250 |
Reverse those same call legs to create a bear call spread: receive $2.50, with $250 maximum profit below $100 and $250 maximum loss above $105. For puts, assume the 105 put costs $4 and the 100 put costs $1. Buying the 105 put and selling the 100 put creates a bear put debit of $3: maximum profit $200, maximum loss $300, breakeven $102. Reversing those put legs creates a bull put credit of $3: maximum profit $300, maximum loss $200, with the same $102 breakeven. Brokerage charges reduce every result.
Build and compare the structure in TradingView Options
- Open the Options strategy builder and select a call or put vertical from the handbook, then create a strategy copy.
- Check the underlying, expiration, strike, B/S direction and equal leg sizes against the comparison table. Keep the expiration identical; different dates create a calendar or diagonal spread.
- Set each leg's price explicitly. TradingView's Adjust menu supports bid, ask, midpoint and theoretical price choices. A midpoint or theoretical price does not establish an executable fill.
- Compare the expiration payoff with the calculator above. Different premium inputs produce different breakevens; match contract units before comparing totals.
TradingView documents these controls in its Options strategy builder guide. This workflow models a position. It does not establish a historical multi-leg backtest, a fill record or a broker margin requirement.
Why a capped payoff can still create an assignment problem
Each short American-style option can be assigned independently. Owning the other leg does not make it exercise automatically when the short leg is assigned early. A short call assignment may create short stock; a short put assignment may require buying stock. Check dividend dates, remaining time value, exercise rules and the broker's handling of the long leg.
Near a strike at expiration, uncertainty about exercise can leave an unintended stock position after one option expires. Stock moves, financing, dividends, fees and closing costs can take the realized account outcome outside this simplified payoff. European-style exercise and cash-settled products have different settlement rules; verify the actual contract. The tool requires 100-share legs. Confirm the deliverable with your broker; a multiplier alone does not establish that a contract is unadjusted.
Check the inputs before interpreting the curve
Load a ticker, select one of the returned expirations, choose a structure, then select the long and short strikes in the stated order. The calculator uses daily closes from the returned option snapshot, not bid/ask execution prices. A missing close does not mean a free option. It rejects zero-cost, full-width and inconsistent combinations; stale closes can cause that rejection even when a tradable spread exists elsewhere.
Only the first 250 returned contracts are loaded, so a missing strike or expiration is not proof that the exchange does not list it. Verify both legs' current bid/ask, liquidity, multiplier and quote time in your broker. The chart shows expiry P&L per share and excludes interim time value, volatility changes and commissions. It cannot estimate early-exit prices or a win rate from the maximum profit/loss ratio.
Educational calculations, not investment advice. Options can lose the capital committed and assignment may create additional stock exposure. Continue with the TradingView strategies guides.