Profit and Loss Calculations for Spread Strategies

What this video covers

• Why the more expensive option always determines whether a spread is a debit or a credit, regardless of how the legs are ordered in the question
• How maximum gain and maximum loss must always sum to the difference between the strike prices, and how to use that as a math safety net
• Bull call spread versus bear call spread: who buys the lower strike, who writes it, and which one is the debit
• Bear put spread versus bull put spread: why the higher-strike put is always the more expensive leg
• Net debit equals maximum loss for debit spreads, and net credit equals maximum gain for credit spreads
• The Calls Add to Lower (CAL) breakeven shortcut for any call spread
• The Puts Subtract from Higher (PSH) breakeven shortcut for any put spread