A credit spread pays you up front and caps your risk. The trade-off is that the risk is usually larger than the reward, so it’s worth knowing exactly what win rate your spreads need.
The basic math
A put credit spread sells a put and buys a lower-strike put in the same expiration. A call credit spread sells a call and buys a higher-strike call.
- Max profit = credit received × 100
- Max loss = (spread width − credit) × 100
- Breakeven: short put strike − credit (put spread), or short call strike + credit (call spread)
The win rate a spread needs
If every trade ended at max profit or max loss, the breakeven win rate would be max loss ÷ (max profit + max loss). For a 5-wide spread:
| Credit | Max profit | Max loss | Breakeven win rate |
|---|---|---|---|
| $0.50 | $50 | $450 | 90% |
| $1.00 | $100 | $400 | 80% |
| $1.25 | $125 | $375 | 75% |
| $1.67 | $167 | $333 | 67% |
| $2.50 | $250 | $250 | 50% |
Real trades rarely end exactly at the maximums, because you can close early. That’s why your actual average win and loss, from your journal, matter more than the theoretical ones.
What to track for your spreads
- Credit as a percentage of width, for every trade
- How often you take a full or near-full loss
- Your average win and average loss when you close early
- Results by distance from the money and by days to expiration
Put your trades on the record
Import your broker CSV and see every multi-leg trade grouped, your patterns, and your key findings. Free during early access.
Start freeThis guide is for education only and isn’t investment advice. Options involve significant risk and aren’t suitable for every investor. Examples are hypothetical.