B/E=S+P B/E=S+P Straddles Spreads

Long-Call/Put Long/Short Call

call up LC SC "spread across" Short-Call/Put Long/Short Put

put down LP SP "straddle up and down"

buy-left sell right Income Hedging

B/E=S-P B/E=S-P Long Stock/Short call Long Stock/Long Put

a right an obligation Short Stock/Short put Short Stock/Long Call

Plus on top & minus on the bottom for B/E's

Spreads - desired direction is determined by option with larger premium (debit widen & credit narrow) or (dead wives can't nag)

Amount the spead widens or narrows is exactly what you make or lose, the spread is just the difference between the 2 premiums.

Breakevens: Call spreads: Lower strike + net prem ( For calls: Lower Add-LA net credit or debit ) Debit call spreads are bull

Put spreads: Higher strike - net prem (For Puts: Higher Subtract-HS net credit or debit) Debit put spreads are bear

Debit - option bought cost more- you owe a debt Credit call spreads are bear

Credit - option sold cost more (you got paid) Credit put spreads are bull

Margin Req. = net debit buy call LOWER - S.P. & longer exp. Date

buy put HIGHER - S.P. & longer exp. DateMargin Req, lower of:

Debit spreads widen - exercise Credit spreads narrow - expiredifference in S.P.

margin on short position

Straddles - simultaneous buy or sell: Same "series" of information: Call & a put

series = same S tock SES

Long straddler expects fluctuation series = same E xpiration SES

Profits when price goes higher or lower than breakeven series = same S trike SES

Straddles

Short straddler expects volatility Long - buy call/buy put (same SP & Exp)

Profits when price stays between the two breakeven prices by keeping premium Short - sell call/sell put (same SP & Exp)