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Not investment advice. Educational reading. See Disclaimer.
L.1 · INTERMEDIATE · 2 MIN

Options P&L: Calculating Profit and Breakeven

Understanding exact P&L and breakeven is essential before placing any options trade. Unlike stocks where profit is simply (sell − buy), options have premiums, strike prices, and expiration mechanics that change the math.

Quiz · 5 questions ↓
§ 01
AAPL — Current Price. Open AAPL on the Ledge to see current values.
§ 02
PositionBreakevenMax ProfitMax Loss
Long CallStrike + PremiumUnlimitedPremium paid
Long PutStrike − PremiumStrike − Premium (if stock → $0)Premium paid
Short CallStrike + PremiumPremium receivedUnlimited
Short PutStrike − PremiumPremium receivedStrike − Premium
§ 03
Long Call P&L = (Stock Price − Strike − Premium) × 100
§ 04
Price out a real call option on a stock you’re watching. Calculate the exact stock price needed at expiration to break even. Is the implied move realistic?
§ 05
You buy a $200 put for $6. At expiration the stock is at $188. What’s your P&L per contract?
§ 06

Always calculate breakeven before entering a trade. If the stock needs to move 10% to break even and it historically moves 5% in that timeframe, the odds are against you.

§ 07
You sell a $100 put for $3 premium. Stock at $102 at expiry. P&L?
Five questions · AI feedback

Sit with the ideas.

You buy a call option on AAPL with a $150 strike price for $5. At expiration, AAPL trades at $162. What is your profit per share?

Why:

Other lessons in this course.

  1. 01Options P&L: Calculating Profit and Breakeven— reading now
  2. 02Intrinsic Value vs. Time Value
  3. 03The Greeks: Delta, Gamma, Theta, Vega
  4. 04Covered Calls and Protective Puts
  5. 05Implied Volatility: The Option Market's Crystal Ball
See it on a real ticker →