The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides) 11 pot

... time period. The put owner has the right to ‘put the underlying to the opposing party. The other party, the put seller, consequently incurs the potential obligation to purchase the underlying. Buying ... components. The first of these is the amount equal to the difference between the strike price and the price of the underlying, and it is termed the...

Ngày tải lên: 20/06/2014, 20:20

... options theory takes a back seat. I went to the floor and wedged my way into the crowd, and I waited, knowing that I was covered. The bell sounded and the shouting began, and after a few brief stops ... money, then the long is credited with one tick times the contract multiplier, and the short is debited one tick times the contract multiplier. The multiplie...

Ngày tải lên: 20/06/2014, 20:20

... as a potential sale of the index (the ETF) at 113 , and a potential buy of the index at 111 . For this profit potential you pay a premium. In order to assess the profit/loss potential of the spread ... Here, you risk 3.0 to make 1.00. 8 In tabular form the expiration profit/loss is shown in Table 8.5. Table 8.5 Short SPY June 113 111 put spread SPY 109 110 111 112 1...

Ngày tải lên: 20/06/2014, 20:20

... closer to the underlying because they are financed by short options that are further out-of -the- money. There is less potential return than with the long strangle, but there is also less cost and ... You are then long the April 340–350–360 call butterfly. The premium outlay is small, but so is the possibility of the shares closing at 350, 30 days from now. On the other...

Ngày tải lên: 20/06/2014, 20:20

... sellers, and they feel like sitting ducks. Often the market retraces and stabilises, and time decay begins to eat away at the puts, but by then the put sellers are only too glad to close their ... months, and during this time they are exposed to risk. In order to cover their risk, the market-makers need to widen their bid–ask spreads. Under these circumstances, to...

Ngày tải lên: 20/06/2014, 20:20

... on the other hand, you sell the call at 34.40 and pay 33.70 for the put, then you have sold the synthetic future at 114 0.70. Here, you have the obligation to sell the future above 114 0, and the ... Futures, synthetics and put–call parity 223 On the other hand, the holder of the long futures position forgoes the dividends payable for the next six weeks,...

Ngày tải lên: 20/06/2014, 20:20

... more to be said about options in terms of theory and in terms of trading. The Financial Times Guide to Options, and its pre- cursor, Options Plain and Simple, are intended to be a practical guide ... trade them close to expiration in order to clear options off our books and to avoid pin risk. But then again, the arbs try to pay 19.75 for the above box,...

Ngày tải lên: 20/06/2014, 20:20

... Questions and answers Chaper 13 Questions 1 In the UK, the FTSE-100 index has been bullish since the end of October, and you expect this trend to continue through the end of the year. The December ... Given the following May options on Marks and Spencer, determine the price of the synthetic futures contract and the prices of the missing options. Bear in mind...

Ngày tải lên: 20/06/2014, 20:20

... volatile and stationary 110 gamma 57–8, 110 , 112 , 307 long straddle 57, 110 –13 long strangle 116 –18 market volatility 109–10 short straddle 57, 114 –16 short strangle 118 –19 theta 110 , 118 , ... for a specified time period. The put buyer has the right, but not the obligation, to sell the underlying. The put seller has the obligation to buy the under...

Ngày tải lên: 20/06/2014, 20:20

... potentially unlimited The long strangle is the simultaneous purchase of an out-of -the- money call and put 11  Volatility spreads 111 and the potential return is the full amount that the ... than the call, unless you are convinced that the stock has bottomed out. Use the technicals to find a support area. If at expiration the stock closes between 45 and...

Ngày tải lên: 21/06/2014, 00:20