Hi to everyone. This is my first post in this great forum. I entered my first options trade by going long on ENB with a strike price of 55. My premium paid is 3.70. ENB currently trades at $58.28. When I look at my broker's "Open Positions" Tab, the trade shows a $105 Open Profit. (Average Price $3.70, Price $4.75). Since I haven't reached my breakeven point at 55+3.70=58.70 yet, why am I showing a profit? The exp. date is in 338 days. I do have a basic understanding of time decay. Thank you.
Cause you bought something and it went up in value The breakeven price only matters if you hold till expiration. The option price (and corresponding PnL) will move throughout the day with changes in volatility, the underlying's price, and time to expiry.
do you have a basic understanding of time decay? If you did you would know the answer to your question.
such a long dated option is more influenced by changes in implied volatility than changes in spot price