326 
TABLE 21-3. 
Bullishly split strikes. 
XYZ Price al January 50 
Expirafion 
40 
45 
50 
55 
60 
65 
70 
FIGURE 21-1. 
Bullishly split strikes. 
Pu! Profil 
-$800 
- 300 
+ 200 
+ 200 
+ 200 
+ 200 
+ 200 
Part Ill: Put Option Strategies 
January 60 Tolal 
Call Profil Profif 
-$100 -$ 900 
- 100 400 
- 100 + 100 
- 100 + 100 
- 100 + 100 
+ 400 + 600 
+ 900 + 1,100 
Stock Price at Expiration 
and the underlying stock rallies only slightly or even declines slightly, he can still 
make a small profit. If he is correct, of course, large profits could be generated in a 
rally. He may lose heavily if he is very wrong and the stock falls by a large amount 
instead of rising. 
This strategy is often useful when options are overpriced. Suppose that one has 
a bullish opinion on the underlying stock, yet is dismayed to find that the calls are 
quite expensive. If he buys one of these expensive calls, he can mitigate the expen­
siveness somewhat by also selling an out-of-the-money put, which is presumably