# Trying to figure out how much I would make from call option

I bought a BABA call option this morning. \$277.5 call, \$2.87 price, expiration date nov 27. The contract is now worth \$4.80. If I sold now would i make \$210? (4.8 * 100) - (2.87 * 100). Also, it says my break even price is \$280.26. What does that mean? Thanks.

The contract is now worth \$4.80. If I sold now would i make \$210? (4.8 * 100) - (2.87 * 100)

Correct, assuming that \$4.80 is the bid price, not the ask. (less any commissions, of course)

it says my break even price is \$280.26. What does that mean?

That means that the price of BABA must be above \$280.26 at expiry for the option to make a net profit if you hold it until expiry (including the premium you paid). If BABA is at exactly \$280.26 at expiry, you will make \$2.76 on the option, which cancels out (most of) the \$2.87 you paid in premium (I can't account for the other 11 cents - maybe the actual premium was 2.76 and you paid 11 cents in commissions?). If it closes higher than that you'll make more on the option and have a net profit.

Your option can still be profitable before expiry even if BABA is below the break even price, because of the time premium of the option, which is a more complicated subject.

There are some small math errors in the information that you provided as well as the answer that you received.

If you paid \$2.87 for your call option, your cost would be \$287 plus a very small SEC fee about 10 cents. Let's ignore the SEC fee.

At a cost of \$2.87, your break even point is \$280.37 not the \$280.26 that you posted. The only way that this is not an error and you could have paid less than \$2.87 would be if you received a maker/taker rebate from the exchange that your order was routed too. So your cost basis is either \$2.87 (what you think you paid) or \$2.76 (based on your broker's break even information).

If the contract is now worth \$4.80, you have a gain of \$193 or \$204 depending on what the actual cost basis is.

All of the above assumes that you do not pay commissions.