VIII: Options 25: Options Strategies. Chapter 25: Options Strategies © Oltheten & Waspi 2012...
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Transcript of VIII: Options 25: Options Strategies. Chapter 25: Options Strategies © Oltheten & Waspi 2012...
VIII: Options
25: Options Strategies
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Strategies
Shares Options Strategies combine one or more Shares Calls Puts
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Shares
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LongShort
Chapter 25: Options Strategies
Calls
© Oltheten & Waspi 2012
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Long Short
Chapter 25: Options Strategies
Puts
© Oltheten & Waspi 2012
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LongShort
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Covered Call:
Short $40 March GE Call @ $2.50 Long 100 GE Shares @ $40
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Short $40 March GE Call @ $2.50
-$4,000
-$2,000
$0
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0 10 20 30 40 50 60 70 80
$250
Chapter 25: Options Strategies
Long 100 GE Shares @ $40
© Oltheten & Waspi 2012
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Long Shares-$4000
Short $40 Call$250
-$4,000
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$0
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Covered Call
-$3,
750
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Bear Spread:
Short $30 March GE Call @ $10.20 Long $40 March GE Call @ $2.50
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Long $40 Call-$250
Short $30 Call$1,020
Bear Spread
Chapter 25: Options Strategies
Bear Spread
© Oltheten & Waspi 2012
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$0
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Chapter 25: Options Strategies © Oltheten & Waspi 2012
Bear Spread
-100 (P-$30) + $770 = $0
P= $37.70
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Bear Spread
Is there a breakeven price >$40? -100 (P-$30) + 100 (P-$40) + $770
-100P + $3000 + 100P - $4000 +$770 -$230
Chapter 25: Options Strategies
Bear Spread
© Oltheten & Waspi 2012
-$1,000
-$500
$0
$500
$1,000
0 10 20 30 40 50 60 70 80
$770
-$230
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Bull Spread:
Long $40 March GE Call @ $2.50 Short $50 March GE Call @ $0.15
-$2,000
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Short $50 Call+$15
Long$40 Call-$250
Bull Spread
-$235
$765
Chapter 25: Options Strategies
Bull Spread
© Oltheten & Waspi 2012
-$1,000
-$500
$0
$500
$1,000
0 10 20 30 40 50 60 70 80
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Bull Spread
100 (P-$40) - $235 = $0
P= $42.35
Chapter 25: Options Strategies © Oltheten & Waspi 2012
Butterfly Spread
Long 1 $35 June GE Call at $6.70 Short 2 $40 June GE Calls at $3.80 Long 1 $45 June GE Call at $1.75
Chapter 25: Options Strategies
Butterfly Spread
© Oltheten & Waspi 2012
-$100
$0
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Chapter 25: Options Strategies
Butterfly Spread
© Oltheten & Waspi 2012
-$100
$0
$100
$200
$300
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$500
25 30 35 40 45 50 55-$85
Chapter 25: Options Strategies
Write (Short) Straddle
© Oltheten & Waspi 2012
$40 Call @ 3.80$40 Put
@ 3.90
-$4,000
-$3,000
-$2,000
-$1,000
$0
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Chapter 25: Options Strategies
Buy (Long) Straddle
© Oltheten & Waspi 2012
$40 Call @ 3.80$40 Put
@ 3.90
-$1,000
$0
$1,000
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Chapter 25: Options Strategies © Oltheten & Waspi 2012
Synthetic Stock
Use options contracts to synthesize a long position in the stock
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Long 100 GE @ $40
Options II
