| Position Composition | Risk Profile @ Expiration |
Shown here, both contracts are OTM. They could also be ITM, or one OTM and one ITM.
 | Long 1 put at a higher strike, Short 1 put at a lower strike
Both contracts have the same underlying and the same expiration.
The put with the strike price nearest the stock price will have the most time value. |  | Max Loss: Total cost of the spread, which is the cost of the long put less the credit you received for the short put.
E.g., $1.25 - $0.75 = $0.50
Max Gain: Difference between the strike prices less the cost of the spread
E.g., (39 - 38) - $0.50 = $0.50 |
| Greeks-at-a-Glance | P&L caused by movement in stock price
| Downward movement generates profits, upward movement generates losses. | P&L corresponding to changes in implied volatility
| If short leg has more time value, falling IV is beneficial and rising IV is detrimental. If long leg has more time value, rising IV is beneficial and falling IV is detrimental. The leg whose strike is closest to the underlying asset price will have the most time value. | Time Decay
C:RR ratio is explained in "Decision Making" | Negative C:RR when the long leg has more time value than short leg. Positive C:RR otherwise. | |
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