Static Example
Illustrative, hypothetical math for a single 1-lot bull put spread. Figures are theoretical model outputs for this contract only, rounded for clarity, and are not actual or projected account performance or personalized investment advice.
| Short/Long Strikes | Width | Net Credit (Gross, Before Fees) | Structural Max Loss (Width − Credit, Gross) | Hypothetical Gross Return on Risk (Credit ÷ Max Loss) |
|---|---|---|---|---|
| 100 / 95 | $5.00 | $1.50 | $3.50 | ≈ 42.9% (1.50 ÷ 3.50) |
For a standard 1-lot contract (100 shares), this example corresponds to approximately $150 gross credit received and approximately $350 gross structural maximum loss before any brokerage commissions, regulatory or exchange fees, bid-ask spreads or slippage, borrowing costs, or taxes. Including those costs would reduce any realized net returns.
The 42.9% figure is a hypothetical gross return-on-risk ratio for this specific contract, calculated as credit divided by structural max loss. It is a mathematical projection only, assumes orderly fills near the modeled prices with continuous liquidity, and does not represent a probability of profit or guarantee of any outcome.
Max loss generally occurs if price is at or below the long strike at expiration, but losses can be realized earlier if the underlying trades below the short strike or gaps through both strikes (for example around earnings or news). In stressed markets or if exit orders do not fill, realized losses can approach the full width-minus-credit structural maximum loss.
Some Toll Booth tools may also display educational scenarios that cap modeled downside around approximately 2× the net credit for comparison. Those capped-loss scenarios are hypothetical only; in live trading, realized losses can exceed that capped assumption up to the full structural maximum loss if markets move quickly or automation or manual exits fail to execute.