Wait, if the option is exercised at the 35$ price, doesn't that mean you lose profit? After break even at 32$ is good, but then you have to face the exercising of the option at 35$, thus losing. Does the end result come with profit?
I also thought that but then I reallized it is a strategy using a long call with strike at $30 + a short call with strike at $35 . leaving the profit at $3
+Ajaynehru I believe the maximum profit should be $3. The cost of the strategy is $2 ($3 call you buy minus the $1 you receive from the call you write.) Because the Exercise prices are $5 apart, you make $1 for every dollar the price rises above $30 until you reach a price of $35. That's $5 minus the $2 net cost which is $3.
However what is not said that one has to pay commission and also when one buys or sells the option the gap between bid and ask can be bigger than one wants and as such the 2.00 max loss or the max profit that looks good on these blackboard examples do not pan out in the real world. These examples are only in a perfect world and not the real one.
Thank you so much for posting these videos!!
Thank you so much for posting these videos. You are much better than my professor!
Thank you for the video! Well explained!
Wait, if the option is exercised at the 35$ price, doesn't that mean you lose profit? After break even at 32$ is good, but then you have to face the exercising of the option at 35$, thus losing. Does the end result come with profit?
Once you hit $35, for every dollar you make on the 30 option you own, you lose a $1 on the 35 option you sold, so you profit stays at $3.
I also thought that but then I reallized it is a strategy using a long call with strike at $30 + a short call with strike at $35 . leaving the profit at $3
sir can you provide video for box spread?
explained better than my prof!
great video!!!
I think the maximum profit you can earn is $2 (3-2). But you have shown it as $3. Can you have review this aspect once
+Ajaynehru I believe the maximum profit should be $3. The cost of the strategy is $2 ($3 call you buy minus the $1 you receive from the call you write.) Because the Exercise prices are $5 apart, you make $1 for every dollar the price rises above $30 until you reach a price of $35. That's $5 minus the $2 net cost which is $3.
Thank you mate
please can you do one with puts xx
+Aarzoo Khetarpa Here's one with puts l ruclips.net/video/ttFJx9NJeEY/видео.html
Thanks for watching.
However what is not said that one has to pay commission and also when one buys or sells the option the gap between bid and ask can be bigger than one wants and as such the 2.00 max loss or the max profit that looks good on these blackboard examples do not pan out in the real world. These examples are only in a perfect world and not the real one.
I wish u were my lecturer