Options Profit Lines Explained - Call option indicatorWelcome to a world of visual options trading.
Stop trading options blindly.
In this tutorial I am going to explain the following using the "call option buy or sell indicator":
1. What each line means to your option P&L.
Blue line = 3 points of profit.
Light Green line = 2 points of profit.
Dark Green line = 1 point of profit.
Yellow line = Break even line.
Red line = Your option is "worthless" = Valued at a price close to Zero.
2. The example is on an out-of-the-money call option at a strike of 190, with 9 days to expiration.
3. HOW TO insert the inputs to the indicator has been explained in the previous video.
4. Option prices are affected mostly by time, the price of the stock, and the volatility. Here I demonstrate using the option indicator how easy is to see where the price of the stock needs to move, for you to see specific profit points. Only the time and the price of the stock are changing. Volatility stays the same, in order to simplify the explanation.
5. If you trade options, whether short-term options or long-term options, you need to have a visual map of profit on the chart, so you can know if your trade plan is a realistic one.
Ask yourself:
Is it likely for the price of the stock to move to this profit line?
So I could sell at a profit?
With the call option indicator, you can easily SEE the answer.
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