How I Diagnosed and Cured A Trading Disease!

Quote from Cutten:

He's exactly right. Breakeven is defined as where your net P&L on the trade is $0. And that is where the cost of the option is equal to the proceeds from exercising at expiration. For a call, that equals the strike price + the total cost of the option. In your example, that's 91.25 (ignoring transactions and funding costs).

Perhaps you are thinking of the 1:1 risk/reward point, where your profit would be equal to how much you would lose if it expires out-the-money? The 1:1 point for a call = (2 x cost) + strike. In this case, 92.50.

But you asked about the breakeven point, not about the 1:1 point.
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I have a Feb 60 call on CELG, and the stock is at $59.70 and I am up 220%...
 
Quote from riskfreetrading:

Computers do the calculations, they do not do the thinking--humans do! The problem is in the formula used and its implications, not in the labor to run numbers. It is true that running numbers is a job done well and accurately by computers.
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Break-evens, risk-rewards, probability, profit/loss analysis and graphical representations of various options strategies are at a click of a mouse in real time data on your trading screen.

At least use the best options software out there. Who has the time to calculate theta, Vega, gamma and deltas all day long.

We spent time in making strategies and the soft wares to show how those strategies will pan out under various time frames and volatility levels.
 
Quote from switze22:

I have a Feb 60 call on CELG, and the stock is at $59.70 and I am up 220%...
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The original poster was talking about breakevens at expiration:

"If you were to determine the breakeven for buying the above call and holding until expiration, what would the breakeven be?"
 
This post is lame.

If the guy can't solve an equation for ZERO he needs to be in a different business.

In fact, screw break even. What the hell do you want to know break even for?

"You never count your money, when you're sittin at the table......"

.....hopefully someone understands where im going with this.
 
Your right man. Since I didn't understand time value correctly, I should definitely quit trading for the rest of my life.

Good call.
 
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