The Plain and Simple Guide to Successful Strategies 6 docx

... 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 ... Between 100 and 96 the cost of the put is partially offset by the decline in XYZ. Above 100, the premium paid is taken as a loss. Below 96 the profit on...

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 ... investments, many traders use a 20-day average 68 00 67 00 66 00 65 00 64 00 63 00 62 00 61 00 60 00 5900 5800 5700 560 0 5500 5400 5300 5200 5100 5000 4900 4800 4...

Ngày tải lên: 20/06/2014, 20:20

... spread 0 .66 debit 1.84 0 .66 55 .66 none 55 60 call spread 1.11 debit 3.89 1.11 56. 11 none 55 60 , one by two 0.77 debit 4.23 unlim. 55.77 64 .23 55–57.50– 60 ladder 0.32 debit 2.18 unlim. 55.32 62 .18 A ... out-of -the- money and at -the- money calls or puts. The further a spread is from the underlying, the less cost or income it has, and the less probability it has of...

Ngày tải lên: 20/06/2014, 20:20

... 100–105 call spread. The butterfly is then worth- less, and the cost of the butterfly is taken as a loss. There are other, less common risks, and they are discussed at the end of the section on butterflies. A ... 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 no...

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, and...

Ngày tải lên: 20/06/2014, 20:20

... synthetics pair off, and you pay the value of the box to the counterparty. For an example, simply reverse the long box transaction in M&S, above. Sell the 340 synthetic and buy the 360 ... 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, and they try...

Ngày tải lên: 20/06/2014, 20:20

... – 14.75 = 351. The £0.40 price above the shock is due to the cost of carry on the shock for 75 days: 350 .60 + (350 .60 × 0.005 × 75 / 365 ) = 0. 36, traded at 0.40. (b) The synthetic must be ... 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...

Ngày tải lên: 20/06/2014, 20:20

... 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 underlying at the put buyer’s discretion. Put ... short strangle 118 time and 165 –9 use and abuse of 59 61 time decay 27–8, 309 delta 49–50, 3 06 gamma 54, 307 short strangle 118 theta 47, 58 61 , 308 time premi...

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