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Newbie here.
- Thread starter cramerica
- Start date
Quote from Yuvrajjj:
the spot price is $58, I write a $60 call @ $1.50 premium, what is my p/l if the spot rises to $59 & what is my p/l if the spot rises to $61?
Thank you
this is what happens at expiration:
PnL @ 59, u keep the 150.
if stock rises to 61, PnL is now -100, since u are short 100 shares @ 60.
aloha
Quote from Brighton:
Short 60 call for $1.50 in premium = $61.50 b/e
If stock is 61 at expiration he's still ahead 50 cts or $50 per contract
Thank you FC & Brighton for your replies.
so P/L = Premium collected (for writing) - Spot & Strike difference, right?
& can you tell me what "b/e" stands for?
Quote from Yuvrajjj:
but when the stock rises to $61.50 the premium would also rise, so I would already be at a loss when the stock is @ $61.50, right ?
You are correct. Your P & L may be all over the map leading up to expiration because of changes in the underlying's price, changes in time and changes in volatility, but $61.50 is the b/e point AT expiration.
but isnt the PL of the 60 SP with 1.5 prem an UNREALIZED PL?
meaning if i sold put of SP 60 for prem 1.5. I already have 150 in my pocket. now if the stock went up to 62, the purchaser of the put is not going to exercise his option, and so doesnt matter what my PL stmt says regarding the options's value, I am still going to have 150 in my account correct?
meaning if i sold put of SP 60 for prem 1.5. I already have 150 in my pocket. now if the stock went up to 62, the purchaser of the put is not going to exercise his option, and so doesnt matter what my PL stmt says regarding the options's value, I am still going to have 150 in my account correct?