When you buy a "Right to Buy" ticket, you are hoping the actual price of Bitcoin rises above your locked-in target price.
However, just because the price crosses your target doesn't mean you are instantly making money. Why? Because your ticket wasn't free, you paid an upfront fee for it. You must cover the cost of that fee before you start seeing true profit.
The Lesson of "Example 3"
In our previous lesson, How to Calculate Your Profit and Loss (The Easy Way).
- You bought a ticket locking in your right to buy Bitcoin at $85,000.
- You paid a $1,000 fee for this ticket.
- At the deadline, Bitcoin had risen to $85,500.
Even though Bitcoin went up, and even though you saved $500 compared to the market, your trade actually lost $500 overall. Your $500 savings wasn't enough to cover the $1,000 you paid for the ticket!
The Simple Breakeven Formula
If you plan to hold your ticket until the deadline, it is incredibly useful to know exactly what price Bitcoin needs to hit for you to break even (meaning you make exactly $0. No profit, but no loss either).
Thankfully, the math is incredibly simple: Breakeven Point = Locked-in Price + Ticket Fee
Let's apply this to our Bitcoin example:
- Locked-in Price: $85,000
- Ticket Fee: $1,000
- Breakeven Point: $85,000 + $1,000 = $86,000
If the price of Bitcoin is exactly $86,000 at the deadline, your trade makes precisely $0. Your $1,000 savings perfectly cancels out your $1,000 ticket fee. Every single dollar Bitcoin rises above $86,000 is pure, 100% profit.
Mental Math on the Fly
Because ClickOptions keeps everything simple with a 1-to-1 multiplier, you can do this math in your head in seconds while looking at the trading screen.
- Scenario A: You see a ticket with a locked-in price of $65,000. The fee is $2,000.
Your Breakeven: $67,000.
- Scenario B: You see a ticket with a locked-in price of $100,000. The fee is $3,500.
Your Breakeven: $103,500.
In Summary
To find out exactly where your trade becomes profitable at the deadline, simply add your locked-in target price to the upfront fee you paid for the ticket. Anything above that number is pure profit!