Computing BreakEven of 2 long puts combined w/o using BSM etc.

Discussion in 'Options' started by earth_imperator, Mar 22, 2023.

  1. Let's say there are these 2 LongPuts with identical DTE=90 and UnderlyingSpot=50 :
    LongPut1: Strike=50, InitialPremium=7.50
    LongPut2: Strike=55, InitialPremium=10.50
    Is it possible to compute in advance the breakeven spot for the expiration date for these 2 long puts combined for the same UnderlyingSpot, without using any pricing calculator like BSM etc.?
    What's the math formula for this?
     
  2. Update: it seems it's the average of the both Breakeven points :
    be1 = 50 - 7.50 = 42.50
    be2 = 55 - 10.50 = 44.50
    (be1 + be2) / 2 = 43.50
    https://optioncreator.com/stwzgwa
     
    Last edited: Mar 22, 2023
  3. Update-2: same algorithm works also if both are short puts.