I tried posting this on a more relevant subreddit, but was unable to due to low karma. I know I've posted here before and would like any advice/explanation.
I have a screenshot, but unable to add to this subreddit. There are two positions:
$240 Call 3/21 (sell to open) -$12.70
$240 Call 4/4 (buy to open) $15.25
There's a chart on Robinhood that says:
Max Profit: $817.37 Breakeven: $217.24/$268.59 Max Loss: -$255.00
Red lines outside the two breakevens with a huge upwards green, peaking at $240 in between breakevens.
Basically, the chart is reading breakevens for this option at the near-term expiration of the front month are $217 and $268 with huge profit in between those two prices. Using that chart, if the strike price is $245 at expiration this Friday, my profit would be around $500. How is this the case and how would I not lose $255? If the short call was exercised, would it not automatically exercise my long call so that the shares would be covered, leaving me at a net loss of $255? It would obviously suck since the other expiration is 4/4. I'm not sure if it is accounting for if I already owned the 100 shares. Would my first problem be that I picked a strike price further ITM? I was just drooling over the chart/max profit/ breakeven prices and didn't understand how I could lose (using the RH chart provided) unless it either skyrocketed or tanked outside the breakevens.