Long regular Option trade and your Breakeven point ?

M

md2324

Don't know why I still don't know the answer to this question,
but what is the Breakeven point on a regular Long Call option trade ?

If we buy a ATM option and the Option costs us $2
and also, the spread between the bid x ask is .35 cents

So is the Breakeven $2
Or
Is it $2.35 ?

Thanks for the help
 
Your breakeven is the strike price + the cost of the option. And so if the strike price is 100 and the cost of the option call is $2, then the breakeven is 102.
 
So then the only time the bid x ask would be a concern, is when you buy an Option and then want to sell it , this is when the bid x ask can wreck havoc on you ...... A spread of $1 means that you theoretically will lose $1 " Per " Option ?

So on Options with wide spreads, best to ONLY trade Spreads on those Options .... I'E. BullCall, BearPut , BullPut or BearCall ?
 
Well, the bid ask can certainly represent a drag on performance. I don't know that I would say ONLY trade spreads, but hitting close to the midpoint seems more probable with spreads.
 
Or if wanting to buy just regular Long calls and Puts on Options with wide spreads between the bid x ask ....... place your order in the middle of the spread , and " Hope " that you get filled ?

Order may sit there awhile or never get filled at all though
 
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