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OPTION TrAdINg STrATegIeS
 Strategy 14: Covered put Write (Short Futures + Short put) 
example . Sell August futures at $1,200 and simultaneously sell an August $1,200 gold futures put at 
a premium of $38.70/oz ($3,870). (See Table   35.14    and Figure   35.14   .)   
    FIGURE   35.13    Profi  t/loss Profi  le: Covered Call Write—long Futures + Short Call (Similar to 
Short Put) 
 Profi  t/loss Profi  le: Covered Call Write—long Futures + Short Call (Similar to 
Price of August gold futures at option expiration ($/oz)
Profit/loss at expiration ($)
1,000
5,000
2,500
0
−2,500
−7 ,500
−10,000
−12,500
−15,000
−5,000
1,050 1,100 1,150 1,200 1,250
Futures price at time
of position initiation
and strike price
 Breakeven price
= $1,161 .20
1,300 1,350 1,400
−17 ,500
 tabLe 35.14      profit/Loss Calculations: Covered put Write—Short Futures + Short put (Similar to 
Short Call)  
(1) (2) (3) (4) (5) (6)
Futures price 
at expiration 
($/oz)
premium of 
august $1,200 put 
at Initiation ($/oz)
$ amount of 
premium received
profit/Loss on Short 
Futures position
put Value at 
expiration
profit/Loss on position 
[(3) + (4) – (5)]
1,000 38.7 $3,870 $20,000 $20,000 $3,870
1,050 38.7 $3,870 $15,000 $15,000 $3,870
1,100 38.7 $3,870 $10,000 $10,000 $3,870
1,150 38.7 $3,870 $5,000 $5,000 $3,870
1,200 38.7 $3,870 $0 $0 $3,870
1,250 38.7 $3,870 –$5,000 $0 –$1,130
1,300 38.7 $3,870 –$10,000 $0 –$6,130
1,350 38.7 $3,870 –$15,000 $0 –$11,130
1,400 38.7 $3,870 –$20,000 $0 –$16,130