Calculate the Long Call Before You Buy It
Compute max loss, breakeven, and expiration payoff for a simple long call.
worked-steps before-after stat-tile-trio Kai is considering buying 1 XYZ 50 call for $2.40 while XYZ trades at $49. He wants to know the premium at risk, breakeven, and payoff if XYZ finishes at $55. Long call expiration math: premium dollars = quote x 100; max loss = premium paid; breakeven = strike + premium; payoff = max(stock - strike, 0) - premium. The common trap is saying "I can only lose the premium" and stopping there. That ignores the breakeven hurdle and whether the trader's price target is large enough. Quote to dollars $2.40 x 100 = $240 premium paid…
Sign up free — one personalized lesson every day, matched to your role and goals.
Already have an account? Sign in