The Plain and Simple Guide to Successful Strategies 7 ppt
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_2 pptx
... 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 ... consider the profit/loss position of the investor who sells the
XYZ put. After all, you may decide that the put sale is the best strategy
to pursue. Becaus...
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_3 pot
... 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 ... the FTSE implied was around 20 per cent. In the back of my mind
was, and always is, 19 October 19 87.
In October 19 97 the UK market started to weaken because o...
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_5 doc
...
call at
expiration
0.00 0.00 0.00 0.00 0.00 –4.23 7. 50 –10.00 –12.50
Profit/loss
–0 .77 –0 .77 –0 .77 0 –4.23 0 –3. 27 –5 .77 –8. 27
In graphic form, the expiration profit/loss of this spread is as shown ... levels. The lower
break-even level is, like the long call spread, the lower strike price plus the
cost of the spread, or 55 + 0 .77 = 55 .77 .
The upper break-even le...
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_7 doc
... 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 ... profit is 8 .75 , and the profit
range is 8 .75 × 2 = 17. 5 points. The value of the spread grows as expiry
approaches and as the shares remain centred at...
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_9 potx
... market. Think of the Hunt brothers who tried to corner
silver in the 1 970 s.
29
30
31
32
33
Vols
CL
35
36
37
38
28
670 0
6800
6900
70 00
71 00
72 00
73 00
74 00
75 00
76 00
77 00
78 00
79 00
8000
8100
8200
8300
8400
8500
8600
870 0
Figure ... sellers, and they feel like sitting ducks. Often
the market retraces and stabilises, and time decay begins to eat away...
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_10 ppt
... 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 ... at 33 .70
Here, you could sell the call at 34.40, pay 33 .70 for the put, and pay
1140 .70 for the future. You have then sold the synthetic at 1140 .70 and
y...
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_11 pot
... until expiration and the call is worth 0.28. The stock is
at 74 .16, and it has been ranging from 72 .50 to 77 .00 during the past two
weeks, and you expect it to continue to do so for the foreseeable ... 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,...
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_13 docx
... 577 5.0 5825.0 5 875 .0 5925.0 5 975 .0 6025.0
Calls
159.5 1 37. 5 1 17. 0 97. 5 81.0 68.0 57. 0 46.5 35.5
(a) i) What is the cost of the long 5 675 – 577 5–5 875 call butterfly?
ii) At expiry, what is the maximum ... 275 0 + 3.8 = 275 3.8
v) 2846.2 – 275 3.8 = 92.4 points
vi) 3.8
(b) i) 1 07 + 54.5 – 85.8 – 68.4 = 7. 3
ii) (2850 – 2800) = 42 .7
iii) 2850 – 7. 3 = 2842 .7
iv) 26...
The Financial Times Guide to Options: The Plain and Simple Guide to Successful Strategies (2nd Edition) (Financial Times Guides)_14 doc
... volatility changes 173 –4
implied volatility vs 170 –3
long iron butterfly 122
options calculator 175
other 174
rho 174 , 308
spreads 74 , 78 , 85, 89
theta see separate entry
time and 165–9
vega ... positive and negative 56 7, 58
short straddle 57
strangle 57, 308
time and 165–9
volatility trading 57 8
Greeks 175 –6
delta see separate entry
delta vs gamma, theta and...
The Plain and Simple Guide to Successful Strategies_1 pdf
... put, and you will be obli-
gated to buy the stock at the strike price, or 45. The cost of your stock
purchase will be effectively reduced by the credit of the spread. For exam-
ple, if the stock ... the stock has bottomed out.
Use the technicals to find a support area.
If at expiration the stock closes between 45 and 57. 50, the credit from the
spread, or 0.03...