3/29/2024 0 Comments Payoff vs profit options![]() ![]() Looking at the last time that BABA made this trip from $106 to $96, which took 16 calendar days, we reckoned that this trip could happen in three weeks or less. If the downtrend did continue, then it should take the stock down past its earlier low below $96. It looked like a good bet to fail at that level and make another down leg. It was currently rallying up toward a level of supply at around $106-108. The stock had been in a prolonged downtrend. As of January 22, 2015, the stock chart for Alibaba Group looked like this: First, we will look at the price chart of a stock. The best way to describe an option payoff diagram is through an example. Being able to do this will give us a big leg up on the option trading competition. They allow us to make good estimates of how our option trades will do under varied conditions. ![]() If you are not familiar with these, it is a good idea to learn about them. ![]() It has been a while since I wrote about option payoff diagrams. Online Trading Academy Article of the Weekīy Russ Allen, Online Trading Academy Instructor ![]()
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