Option Millionaires

[leemalone2k3]

Well, the Max loss on that trade is if the stock closes above 115 on expiration and you are still holding the spread. The max loss is determined by taking the difference between the strike prices and subtracting the credit paid. In this case there is a 5.00 strike difference and the credit paid is 1.64. S0 5.00-1.64= $3.36.

The max gain is recieved if you hold the spreaduntil expiration andit is below 110. The max gan is the credit recieved of 1.64.

The break even stock price is determinedby taking the smaller strike and adding the credit recieved. In this case he sold the 110s's. 110.00+ 1.64= $111.64.