![]() Unfortunately, our GME contract has sky high IV at around 250%. To make a big move in the near future, options will cost more since there is a greater chance of something happening. ![]() Essentially a stock is more volatile, or expected It's important to understand that high IV means higher option prices. Many things can affect IV, such as upcoming earnings or other uncertainty. Implied volatility represents the expected volatility of the option, and isĪffected by the supply and demand of it. While OptionStrat is pretty accurate, it can't predict the future. The statistics also show the breakeven price (or range), which is the price that the underlying stock needs to reachįor your trade to be profitable on the expiration date. As with all strategies, the more risk you take, the more (potential) reward you get. Of some important characteristics about the trade such as the cost of it, the maximum profit and loss, and the chanceįor a long call, the max loss will always be the price you paid for the option (the net debit, or cost).īy dragging the strike, you can see that increasing the strike price will decrease your max loss, but also decrease your chance You can open the optimizerĪs you adjust the trade, you will also see the trade statistics change. Of trades to find the trades with the highest return or highest chance of profit. OptionStrat also has a built in options optimizer, which does the hard work of searching through thousands To reveal additional strikes if they can't all fit on screen. You can also drag the entire strike slider To change the strike, just drag the option to a different strike. To change the expiration date, simply click another date on the expiration slider. Now that you know how to use the table and chart, you can experience the real power of OptionStratĪs any adjustments you make to the trade are shown in real-time. By dragging the days 'till expiration slider, you can see how the profit and loss shape looks forĮach day until expiration. You can see from the chart that this call will be worthless upon expiration, unless GME is above Screenshot of the profit and loss graph at expiration If you want to look at a specific date more closely. Think of thisĪs essentially a chart of a single date instead of all days like the table shows. The graph icon, which shows the profit and loss as a graph for the day that is selected. Additionally you can switch to graph view by clicking Of the contract by clicking the buttons below the table. You can choose between viewing the profit and loss in dollars or percent, as well as viewing the actual value Will be worth significantly less since long calls and puts lose value as time passes (known as theta or time decay). If GME stays at $39 by the time the contract expires, it If GME goes up 10% tomorrow to $39, we expect a profit of 32%. This table shows the expected profit and loss of your trade at various prices and dates. We will keep things where they are for now and explain the profit table, which is the heart of OptionStrat. In this case, that is the $30 strike GME call for February 5th 2021. OptionStrat defaults to a call near the current price of the stock, and to a strike about three weeks out. Using the profit calculator table and chart You think GME is going to continue on it's path to the moon □, so youĬhoose to buy a call. ![]() Let's pretend you do know something though (seriously, you should have a good idea on why it's going to move - but we'll save Will it keep going up? I'm not sure, but we'll see what happens when it opens Tuesday after the long weekend. "Long" just means you are buying the call to open your position, as opposed to selling it.įor our stock, we will use GME (GameStop) which has seen a huge spike over the past few days. ![]() On OptionStrat, you canĬan open a new call from the main page, or by clicking "Long Call" in the strategy menu. To explain how OptionStrat works, lets use a simple call as an example. Walks through how to set up a simple options trade on OptionStrat to visualize its profit and loss. When trading options, it's important to understand the characteristics of your options strategy.Īn options profit calculator like OptionStrat is used to find the potential profit and loss at various prices, as wellĪs show how your trade is affected by implied volatility (IV), time decay, and other factors. ![]()
0 Comments
Leave a Reply. |