Assume i put in the 2 following Bull Call Spread, what is my net profit if my maximum profit is realized and how is it calculated A. Max Profit = 547 Cost of trade = 454 B. Max Profit = 890 Cost of Trade = 611
Bull Call Spread: (Long 50/Short 60) 50 Call = $5 ($500) 60 Call = $2 ($200) Cost of Trade = $3 ($300) Max Profit = $7 ($700) Max Profit = 60-50=10 minus cost of trade (3) = 7 ***In your examples, "net profit" = "max profit", depending upon your definition of "max profit".
I don't use Thinkorswim but "max profit" = "net profit". They get "max profit" the same as example I used above. Post the trade you used to get your example if you want an explanation.
Call Spread = 165/175 Max Profit = 175-165 = 10 minus cost (4.53) = 5.47 ($547) In your picture, price of 165 = 7 Your showing cost of 180 but cost of 175 must be 2.47 Cost of trade = 7 minus 2.47 = 4.53 ($453) Spread = 10 (175-165) Cost = 4.53 (7-2.47) Max Profit = 5.47 (10-4.53)
The distance between your option strikes is $10, so it’s a $10 spread that can be worth $1000 max. ($10/share x 100 shares) While whatever price you pay ($547) is the current cost/value of that spread. $547 + $453 = $1000 So you have potential to make $453 profit and almost double your bet/investment. “Max profit” meanz actual profit, not “Max value”.
His screenshot seems to show 2 different spreads, but the one he’s trying to buy seems to be $165/$175 call spread.