Tell me what retarded mistake I'm making on this option calculator. Trying to hypothetically short.
Current stock price: $3.50
Jan put buy strike price: $2.50
Price per option (ask): $0.60
Yet when I check around Jan 18th expiry, it's saying I lose 80% of invested capital if share price hits $2.40
Wtf?
Hi i am a wall st. spawn. They signed me up to be their life extension but I don't know how to fly their ship. Everything is glitchy as hell and all I see is pictures of handcuffs and slave references. Have I been dupped? What is this button that says "youtube.com
Will it send me to #80526B?
You didn't mention the cost of commissions, and that really needs to go into the calculation, but you didn't, so I won't in the math.
If the strike price is $2.50 and the price of the option is $0.60, your break-even would be anything below $1.90 (=2.50-.60)
so if the price hits $2.40, you still haven't reached break even.
You say this is a hypothetical, but if it's a real stock, give me the symbol and I will run it through my routine and post you a break-even chart to give you a better answer.
With options, you have to dig into the math of all options. Sometimes buying a different strike price has a much better profit potential
Link to calculator? Could be that you're accidentally selling the Put option, rather than buying it.
Hey, thanks man. Already making more sense. Let's look at AXSM.
Clinical trial results in Jan 2019, so let's say price either drops or goes up several fold. Looking at those puts.
Also, why not just buy further out contracts? Profit seems to be higher as event is happening sooner than expiration
Definitely buying it. Found one of my problems, you have to click a button to expand price range. Price range was set up for calls I suppose, so it was confusing. Wasn't listing far enough down in prices, only listing higher and higher prices
Yeah, this user is right.
Options which have a longer time to expiry will be more expensive, all else being equal.
I would NOT buy put options in AXSM right now for two reasons....
1. They are very thinly offered. At least on e-trade, there are only 3 strikes available: 2.50, 5.00 and 7.50
2. They are way overpriced.
You said the results are in January. The nearest expiring options after january would be March 15. Because there are only 3 strikes, this chart is going to look weird, but here it is anyway.
Column AY will show you the total cost to buy 1 put at each strike. But now pay attention to column BA, that is the break-even price.
If you notice, none of them will make you money until the stock pretty much collapses. the $7.50 puts won't break even until the price drops below 2.55, and the 2.50 puts won't break even until the price drops below 1.65
I put in an estimated future price of 2.50 (which is where the projected profits column is calculated off of). But even at that, you would only be making $4.60 off of a $487.70 investment.
And since with options it's either make money or lose all, that's really not the sort of risk you would be looking for. (or at least not the kind I would be looking for)
Do you do this for a living/substantial side-income?
are u retarded