Max Loss calculation help

wburt1948

wburt1948

New guy here.
Doing a vertical call my net cost is $0.90 or $90 for 100 contracts.
Some articles have stated my MAX loss is Premium ($0.90) x 100 = $90.
MAX Gain is Width - Premium. In my case that's:
3.5 - 0.9 = 2.6 x 100 = $260. This is not Net profit is it? Shouldn't Net Profit be:
$260 - $90 (cost coming in) = $150 profit.

So shouldn't my MAX loss be $90 coming in and $90 both ends of the option OTM or a total of $180 loss?

Many thanks!
 
Your max loss is $90.
The max value of that spread is $350 (if your spread/strike width is 3.5). So your max net profit is $350 - $90 = $260.
Your max ROI is 289% ($260 on $90 invested).

Not sure what you mean by both ends. If both call options expire worthless (above expiring price) then you’ve lost the $90 you paid for the spread.
 
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