Viewing a single comment thread. View all comments

ChapterJolly8220 t1_ixt8lht wrote

Reply to comment by T1m3Wizard in It was nice knowing you guys. by cyuvlol

Breakeven price has nothing to do with profit.

0

drewski2305 t1_ixtnx0e wrote

it absolutely does. he needs SPY to drop below his breakeven for the trade to be profitable

3

ChapterJolly8220 t1_ixtpiwt wrote

I’m sorry what? He’s only down 8% on this trade. It’s only coincidence that his break even is so close. It’s all about what premium you bought it at and the Greeks

2

drewski2305 t1_ixtpzov wrote

his breakeven price is not static. it will not change. that is the price he needs it to be at, or below, to make any money on this trade at expiration. monday morning, if spy dips down, he could sell for a profit as there is still some theta value. at expiration, if spy is over his breakeven price, he will lose money. Strike price - premium paid = breakeven price

2

ChapterJolly8220 t1_ixtrc97 wrote

Breakeven is does mean the profit price. My Breakeven on my current trade is 413 (strike 407) but I’m up 5%. It’s all about what the price is AT expiration and if you’re trading options until expiration - you’re doing it wrong

2