316 
TABLE 20-3. 
Results of a combination write. 
Stock Price at Coll 
Expiration Profit 
40 +$ 400 
50 + 400 
53 + 400 
57 + 400 
60 + 400 
65 + 400 
70 + 400 
73 + 100 
77 300 
80 600 
90 - 1,600 
FIGURE 20-3. 
Sale of a combination. 
C: 
~ +$700 
·5. 
X 
UJ 
rn 
en en 
0 ....I 
ci 
e a.. 
$0 
Put 
Profit 
$1,700 
700 
400 
0 
+ 300 
+ 300 
+ 300 
+ 300 
+ 300 
+ 300 
+ 300 
Stock Price at Expiration 
Part Ill: Put Option Strategies 
Total 
Profit 
-$1,300 
300 
0 
+ 400 
+ 700 
+ 700 
+ 700 
+ 400 
0 
300 
- 1,300 
At first glance, this may seem to be a more conservative strategy than straddle 
writing, because the profit range is wider and the stock needs to move a great deal to 
reach the break-even points. In the absence of follow-up action, this is a true obser­
vation. However, if the stock begins to rise quickly or to drop dramatically, the stran­
gle writer often has little recourse but to buy back the in-the-money option in order