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How Does the Net Premium Affect the Maximum Loss Amount?

A net credit reduces the maximum loss; a net debit increases the maximum loss, relative to the put strike price.
Greeks.Live04.11.25

How Does the Net Premium Affect the Maximum Loss Amount?

The net premium directly adjusts the maximum loss calculation. If the options are established for a net credit (premium received), this amount reduces the maximum loss, making the floor more effective.

If established for a net debit (premium paid), this cost is added to the maximum loss, slightly lowering the effectiveness of the floor.

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