Everything so far has been one contract at a time. A spread is what happens when you hold more than one at once, and the combined position behaves like a single instrument with properties neither leg had alone.

The mental model that makes all of this easy: payoffs add. Whatever leg one is worth at a given price, plus whatever leg two is worth at that price, is what the position is worth. Every iron condor and jade lizard in the world is that addition, done more times.

What the second leg bought

Look at the two configurations. The short put alone loses more as the stock falls, all the way to zero — a worst case of thousands of dollars. Adding a long put five dollars lower stops the bleeding dead at that strike.

You gave up premium to get that. The long put cost money, so the net credit is smaller. In exchange you converted an undefined-risk position into a defined-risk one, where the maximum loss is a number you can state before you open.

The pattern is exact: the spread is worse by $70 in every ordinary outcome, and dramatically better in the disasters. That is what insurance looks like when you write it down as a table.

The vocabulary, once

Leg. One contract within the position. A spread has two; an iron condor has four.

Credit spread. You collect more than you pay, so cash arrives on open. The short leg is nearer the money than the long one.

Debit spread. You pay more than you collect. The long leg is nearer the money.

Vertical. Both legs share an expiration and differ only in strike — the kind you just built. “Vertical” because you move up and down a single column of the chain. Legs at different expirations make a calendar; different in both make a diagonal.

Wing. The long, protective leg that caps one side.

Width. The distance between strikes. It sets both the maximum loss and, largely, the credit.

Width is the only real dial

Once you have chosen a short strike, the width decides nearly everything else about a vertical spread:

• Maximum loss is the width, in dollars per share × 100, less the credit received.
• Maximum profit is the credit.
• Capital required is the maximum loss.
• A wider spread collects more credit and risks more.

Narrow spreads are cheap and defensive; wide spreads approach the behaviour of the naked short option they were built from. At sufficient width the long leg is so far away it does almost nothing except tie up a little less capital.

The cost nobody mentions

Two legs means two bid-ask spreads to cross on the way in, and two more on the way out. On a liquid chain this is negligible. On a thin one it can eat a meaningful share of a spread's already-modest credit.

Most brokers offer a combined ticket that fills both legs together at a net price, which is both cheaper and safer than legging in one at a time — legging leaves you briefly holding a naked option, which is not what you signed up for.

What can go wrong

Legging in manually. Between the two fills you are holding an undefined-risk position. Use the combined ticket.

Assuming defined risk means low risk. The maximum loss on a spread is typically several times the credit. Defined is not small.

Trading spreads on illiquid chains. Four spread-crossings per round trip makes liquidity matter more here, not less.

Expecting to be assigned shares. A credit spread that goes wrong hands you a loss, not a stock position. If the plan was to own the shares, a spread was the wrong structure.