I was experimenting with different options positions and noticed that all those strategies have at most two break-even points.
I am trying to construct an options position (with fixed stock and expiry) that has three break-even points, but I have not been able to find one.
So is it even possible to create an options payoff structure with three break-even points at expiry?
Or one can prove" that this is impossible under standard option combinations?
Breakeven simply means the point at which your PNL is 0. Common strats with 1-4 legs generally have 1 or 2 breakeven points. But you can select options to create pretty much any type of payoff graph.
For example, I sometimes backtested selling an ATM straddle, and buying two straddles 4 strikes above and below ATM. While this is not a good strategy, depending on the option premiums, it can often give you 4 breakeven points.
It has 2 B.E.P . Can you plz check again?
As I said, it depends on the premium. The payoff is W-shaped so it may have 2 or 4 breakeven depending on if the middle peak is above zero. I have have attached an example for the current NIFTY expiry where it has 4 breakevens.
