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24.11.2015 admin
A profit and loss diagram, or risk graph, is a visual representation of the possible profit and loss of an option strategy at a given point in time.
Option traders use profit and loss diagrams to evaluate how a strategy may perform over a range of prices, thereby gaining an understanding of potential outcomes.
When the graph line is on $25 (the cost per share), note that the profit and loss value is $0.00 (breakeven).

Since there is, in theory, no upper limit to the stock's price, the graph line shows an arrow on one end.
In this example, shown in Figure 10, a call option has a strike price of $50 and a $200 cost (for the contract). If the option expires worthless (for example, the stock price was $50 at expiration), the loss would be $200, as shown by the graph line interested the y-axis at a value of negative 200.

Figure 11, taken from the Options Industry Council's Web site, shows various options strategies and the corresponding profit and loss diagrams.

Understanding forex charts
Bank withdrawals over \u00245000

Rubric: Can You Make Money Trading Options


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