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Noob Question on Options (calculating profit)

Xios · 2017-03-12 22:14:26

Hi Guys, I was curious on Degiro and looked at options, I looked at some Snap Inc options and saw some reasonably priced Puts. So I bought a few of them. Link here Now i'm confused, the website i linked says I'll only profit if the price is below $19.84. Even though the strike price is $25. I paid €0.50 for each Put. So if…

12-03-2017 10:14pm

#1

Xios

Registered Users, Registered Users 2 Posts: 2,073 ✭✭✭

Join Date: March 2006

Posts: 1734

Hi Guys,

I was curious on Degiro and looked at options, I looked at some Snap Inc options and saw some reasonably priced Puts. So I bought a few of them.

Link here

Now i'm confused, the website i linked says I'll only profit if the price is below $19.84. Even though the strike price is $25. I paid €0.50 for each Put.

So if Snap Inc is $20 on the strike date. Do i not earn $25 - ($20+ €0.50), so roughly $4.50 per Put?

Can anyone 'splain why the stock price needs to be less than 80% of the strike price to make a profit?

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