How to calculate break even price of Bull Put Spread and Bear Call Spread

Question

I need some help confirming if I am calculating the break even price correctly for both Bear Call Spread and Bull Put Spread.
For Bear Call Spread, I have:
breakEvenPrice = longLegStrike+(longLegCost-shortLegCost)

For Bull Put Spread, I have:
breakEvenPrice = longLegStrike+(longLegCost-shortLegCost)

Would these equation be correct?  It seem for both they are the same.

Bob Baerker · Answer

The potential problem with your formulas is that long legs are debits and short legs are credits.  So longLegCost is a negative number.
An easier way is that the risk of a debit spread is its cost. For example, for an $85/$90 bull call spread that costs $3, the BE is $88.
The risk of a credit spread is the difference in strikes less the premium received. For example, for an $85/$90 bull put spread with a credit of $2, the BE is also $88.
Both have the potential to make $2 and the potential to lose $3.
Adjust your formulas accordingly.

How to calculate break even price of Bull Put Spread and Bear Call Spread

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