A two-leg vertical spread pairs a bought option with a sold one, so your maximum loss and your maximum gain are both fixed and known before you enter. This grid shows the whole trade at every combination of stock price (down the side) and date (across the top). Green is profit, red is loss- and because the spread is capped both ways, the color never runs off the top or the bottom.
Strategy
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Upper strike K2 must be above lower strike K1. Adjust the strikes.
Max profit (capped)Small profitBreak evenSmall lossMax loss (capped)▸ current $420 price
Assumes implied volatility stays constant across the grid. Values from Black-Scholes with rates set to zero, for clean intuition. TSLA $420 is illustrative only.
Plain EnglishA vertical spread pairs two options so both your maximum loss and your maximum gain are fixed and known before you enter. The matrix shows the whole thing bounded- green is capped above at your max profit, red is capped below at your max loss. Read down a column to see what price moves do on a given day, and across a row to see what time does at the same price. Notice the deepest greens and deepest reds stop at a ceiling and a floor; that flat cap is the entire point of a spread.
Three things to read from a spread matrix:
Both ends are capped. Unlike a single option, the darkest green tops out at your max profit and the darkest red bottoms out at your max loss- the numbers cannot run past those two lines.
Direction lives in the color drift. In practice a bullish spread (bull call, bull put) turns greener as price rises up the rows; a bearish spread (bear call, bear put) turns greener as price falls.
Time picks a side. As a rough guide, debit spreads (bull call, bear put) need the move to arrive and fade toward red as you go right; credit spreads (bear call, bull put) collect that decay and firm up toward green.
Taxes are not shown here. Options and the underlying stock are taxed differently, and it depends on your holding period and account type. None of this is tax advice.