Buy a Put on Russell 2000

[Guest]

Hi,

I am learning by Paper Trading in the "Think or Swim" software that comes with opening a TD Ameritrade account.  I'm looking to buy a Put on the Russell 2000, ticker RUT.  

I placed the Paper Trade this morning, around 11 am on Monday 30 Mar 20.  RUT was at about 1146.  

Here is what I have about the option:

Contract for 1

Price: 129.50

Strike: 1160

When I do "analyze trade" the graph pops up.  I made sure that the graph was for ONLY this option.  It shows: 

That when the stock hits 1160, I am at my maximum loss, of $12,950 on 1 Sept 20.  

That when the stock is at 1140, I am at a loss of $10,955 (and it changes by a few dollars every minute or so, as the market is open and the stock price is moving).

That when the stock is at 1030.50, I break even and have a profit/loss of $0.

That when the stock is at 930.3, I would be at a profit of $10,000.  

 

QUESTION:

Am I reading this right?
So I would have to put up $12,950, and in order to get my money back, I need RUT to drop to about 932?
I could double my money to $26,000 if RUT falls to 777.  So I get that I am basically buying that leverage.  777/1150 is 68%.  I would need RUT to drop by a full third, and that's as of today, but RUT has already dropped by about a third from it's high (1150/1700, it was at 1700 in Jan and Feb 2020).  

 

Here is a screen shot, if that helps.

 

Thank you for your time and consideration.

BHD

[Humble]

No, your breakeven is at 1030. 

But those calculations are at expiration. The P/L chart before expiration is different.



Also, IV changes can effect the P/L dramatically.