No. of Recommendations: 1
Even so, now you've got me curious, how did you come up with those breakeven numbers (435.4 & 424.6)?

If you sell 440 CALL at 28.00 and buy 430 CALL at 33.00 ...

Selling 440 CALL at 28.00 (credit)
Buying 430 CALL at 33.40 (debit)
-------------------------
Net debit = 5.40 (debit)
-------------------------

If Stock Price = 420 (neither CALLs are exercisable)
Profit Loss = -5.40 (Loss)

If Stock Price = 430 (neither CALLs are exercisable)
Profit / Loss = (430-430) - 5.40 = -5.40 (Loss)

If Stock Price = 440 (only your 430 CALL is exercisable)
Profit / Loss = (440-430) - (440-440) - 5.40 = 4.60

If Stock Price = 450 (both 430 and 440 CALLS are exercisable)
--------------------
Profit / Loss = (450-430) - (450-440) - 5.40 = 4.60

Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement