Risk Reversal Payoff Calculator
A risk reversal pairs a long out-of-the-money option with a short out-of-the-money option on the opposite side to create cheap directional exposure. The bullish version buys a call and sells a put; the bearish version buys a put and sells a call. This calculator shows the breakeven, the net premium and the profit or loss at any expiration price. Enter the two strikes, the premiums and the share count.
Risk reversal payoff formula
Bullish: net = call premium - put premium (per share)
Long call payoff = +max(0, price - call strike) * shares
Short put payoff = -max(0, put strike - price) * shares
Total P/L = Long call + Short put - net * shares
Breakeven (net debit) = call strike + net; (net credit) = put strike + net
Bearish mirrors this: long put, short call, net = put premium - call premium.
A positive net is a debit you pay; a negative net is a credit you receive. The bearish branch swaps the long and short legs.
Worked example
Bullish risk reversal, call strike 110 for $3, put strike 90 for $3, 100 shares. Net = 3 - 3 = $0 (zero cost). If the underlying closes at $115: long call payoff = (115 - 110) * 100 = $500; short put expires worthless. Total P/L = 500 - 0 = $500.00. Net premium = $0.00. With a zero net debit, breakeven equals the call strike, $110.00.
Risk reversal: frequently asked questions
What is a risk reversal?
A bullish risk reversal buys an out-of-the-money call and sells an out-of-the-money put on the same underlying and expiry. The put premium helps pay for the call, often making the structure low cost or zero cost. It gives bullish exposure with unlimited upside, but the short put means full downside below the put strike.
What is the payoff profile?
Above the call strike you gain like a long call. Between the two strikes you keep or pay the small net premium. Below the put strike you lose like a short put, dollar for dollar with the underlying. The position is established for a net debit or net credit depending on which option is more expensive.
What is the breakeven?
For a bullish risk reversal established for a net debit, breakeven is the call strike plus the net debit per share. For a net credit it is the put strike minus the net credit. The calculator reports the breakeven based on the net premium you enter.
Sources and method
- U.S. Securities and Exchange Commission investor education on options: Investor.gov: Options.
- Options Clearing Corporation: theocc.com.
- Payoff is the standard sum of a long and a short option at expiration, netted against the premium; no proprietary data is used.
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.