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An option position’s breakeven price is the specific stock price that results in no profit or loss for that options strategy at expiration. You may learn breakeven prices initially by memorizing formulas for each strategy, but you can do better than that.
How can we intuitively understand ANY option strategy’s breakeven price at expiration? After this video, you will be able to determine any option strategy’s expiration breakeven price by asking one simple question.
We’ll go through examples, starting with the easiest and moving on to more ‘difficult’ examples.
Video Timestamps
0:00 – Introduction
1:21 – Call Option Breakeven Example
3:54 – Put Option Breakeven Example
5:12 – How to Get ANY Option Strategy’s Breakeven Price
6:30 – Call Vertical Spread Breakeven Example
8:17 – Iron Condor Breakeven Example
10:46 – Call Butterfly Spread Breakeven Example
Hopefully, you thoroughly understand that the intrinsic value of each option at a given stock price is how you can quickly calculate a strategy’s expiration breakeven price, and without just memorizing a formula.
Leave a comment below if you have any questions or feedback!
==== ADDITIONAL RESOURCES / VIDEOS MENTIONED ====
Options Trading for Beginners (The ULTIMATE Guide):
Credit Spread Trading Plan:
What Are LEAPS?:
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