The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides) 14 doc

... 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 intrinsic value. The second component is the time ... obliga- tion, to buy the underlying. The call seller has the obligation to sell the underlying at the call buyer’s discretion. These are the terms of...

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

... know about theory.) Then together we devised trade recommendations which the brokers passed on to their clients. The clients did well. One of them took one of our recommendations and bought ... If the underlying suddenly moves to the short strike that was formerly furthest out-of -the- money, the first solution is to buy back that strike. The second solution is to bu...

Ngày tải lên: 20/06/2014, 20:20

... 5. The profit on the long 95–100 call spread pairs off against the loss on the short 100–105 call spread. The butterfly is then worth- less, and the cost of the butterfly is taken as a loss. There ... the ATM call fly. 13  Butterflies and condors: combining call spreads and put spreads 141 There is an additional risk in that the deep in -the- money puts on stoc...

Ngày tải lên: 20/06/2014, 20:20

... 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 ask the market-makers to ... wildly, then the options market-makers cannot hedge. In order to cover their risk, they need to widen their markets to correspond to the wide range of the underlyin...

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 1140 .70. Here, you have the obligation to sell the future above 1140 , 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, an...

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

... possible if the call is sold at 16.00, and 14. 50 is paid for the put. (c) If the return on a sale of the stock is 0.50 per cent, then no more than £0.40 must be paid for the synthetic over the bid ... of the following statements true or false? (a) If the implied volatility increases, then the delta and theta of the January 47.50 put will also increase. (b) If the...

Ngày tải lên: 20/06/2014, 20:20

... out-of -the- money call 141 –2 long out-of -the- money put 144 –5 non-adjacent strikes 147 –8 short at -the- money call 147 short at -the- money put 146 volatility, dates until expiration and 149 contingency ... 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 th...

Ngày tải lên: 20/06/2014, 20:20

... expiration, the stock closes below the put strike, or 45, you will be assigned on the short put, and you will be obli- gated to buy the stock at the strike price, or 45. The cost of your stock purchase ... 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 4...

Ngày tải lên: 21/06/2014, 00:20