I trade equities but want to play with options around this bottom. Sorry if this is a stupid question. if i want to buy 09 Mar SPY calls, how do i calculate the breakeven? is there a formula for this? I am looking at two strikes: 09 Mar 78.00, current premium ~3.50 and 09 Mar 77.00, current premium ~3.95 current stock price 77.4.
Most who ask this question mean: What is the break-even if I hold until the options expire. Holding that long is usually a big mistake. To calculate, add the premium to the strike. Thus: 1) 78 + 3.50. B/E = 81.50 2) 77 + 3.95. B/E = 80.95 Stock price not relevant. Mark