How much more can I lose selling a naked option compared to selling a defined-risk vertical spread for the same credit?
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Fill in the fields on the left and click Compare to see how much more you can lose going naked versus a defined-risk spread collecting the same premium.
How this is calculated
Naked put max loss assumes the stock falls all the way to $0 before expiration, the worst mathematically possible outcome, not a prediction that it will happen.
A naked call has no maximum loss because a stock's price has no theoretical ceiling. That is the key structural difference from a defined-risk spread.
The defined-risk spread's max loss equals the width between strikes minus the credit collected, multiplied by 100 shares per contract and the number of contracts.
This tool assumes both structures collect the same premium per share so the risk can be compared side by side. In practice, the exact strikes available for a same-credit spread may differ slightly from the naked option's strike.
This does not account for early assignment risk on the naked side, which is covered separately in the assignment risk tools below.
Risk & liability disclaimer: This calculator produces a mathematical estimate based on the numbers you enter. It is not financial advice and does not guarantee any trading outcome. Trading involves risk of loss, and past position sizing decisions do not predict future results. Trading Habits is not a broker-dealer, registered investment adviser, or tax professional, and is not affiliated with any broker, exchange, or data provider. We do not guarantee this tool is error-free or suitable for your situation - always verify results independently and consult a licensed professional before making any trading or financial decision. You could lose some or all of the capital you trade with.
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