Cl,apter 3: Call Buying 111 
TABLE 3-2. 
Comparison of the four alternative strategies. 
If the underlying stock then. . . The best tactic was. . . And the worst tactic was ... 
continues to rise dramatic­
ally ... 
"roll up" 
rises moderately above the do nothing 
next strike ... 
remains relatively unchanged . .. spread 
falls back below the original liquidate 
strike ... 
TABLE 3-3. 
Results at expiration. 
XYZ Price at "Roll-up" "Do Nothing" 
Expiration Profit Profit 
50 or below $ 0 -$ 300(W) 
53 0(W) 0(W) 
56 0(W) + 300 
60 0(W) + 700 
63 + 600(W) + 1,000(B) 
67 + 1,400(B) + 1,400(B) 
70 + 2,000(B) + 1,700 
liquidate 
liquidate or "roll up" 
"roll up" 
do nothing 
"Spread" 
Profit 
$ 0 
+ 300 
+ 600(B) 
+ 1,000(B) 
+ 1,000(B) 
+ 1,000 
+ 1,000 
Liquidating 
Profit 
+$600(B) 
+ 600(B) 
+ 600(B) 
+ 600 
+ 600(W) 
+ 600(W) 
+ 600(W) 
Note that each of the four tactics proves to be the best tactic in one case or another, 
but that the spread tactic is never the worst one. Tables 3-2 and 3-3 represent the 
results from holding until expiration. For those who prefer to see the actual numbers 
involved in making these comparisons between the four tactics, Table 3-3 summa­
rizes the potential profits and losses of each of the four tactics using the prices from 
the example above. 'W" indicates that the tactic is the worst one at that price, and 
"B" indicates that it is the best one. 
There are, of course, modifications that an investor might make to any of these 
tactics. For example, he might decide to sell out half of his long call position, recov­
ering a major part of his original cost, and continue to hold the remainder of the long 
calls. This still leaves room for further appreciation.