The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone, Kirk here again and welcome back to the daily call. On today’s daily call, we’re going to talk about how you determine breakeven points for naked calls and puts. This really gets down to I guess the basics of options trading and something that I don’t think actually even people who have traded options before remember. Sometimes you forget because I get emails from people and they say, “Kirk, I’m trying to figure out where my breakeven points are.” It just comes back down to really actually just simple math and maybe sometimes, just slowing down are not rushing through the process. But in the case of naked calls and puts and we’ll start with naked calls to start. Again, with all naked option selling or all option selling in general, you take in a credit and that credit is then used as the basis for helping to determine where your breakeven points are. In the case of a naked call, let's say that the stock is trading at $95. You sell a naked call at 100 strike, but you take in a $3 credit. Now, obv