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How To Read A Risk Profile

Translating the different components of a risk chart

The Risk Graph

The risk graph is shown as the black line in the image below. This line will tell you how much you will have gained or lost, should the market move by any particular dollar amount.
Figure 4
As you can tell from the red and green zones, long shares profit as price increases and lose as price decreases. Also take note of how the option delta values change with the share price – the 50Δ options are always the current share price.
Figure 5 Figure 6

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