290 
TABLE 18-2. 
Results at expiration of a strangle purchase. 
XYZ Price at 
Expiration 
25 
35 
41 
43 
45 
47 
50 
54 
60 
70 
FIGURE 18-2. 
Strangle purchase. 
C: 
0 
~ ·c. 
X 
w 
1ii 
(/) $0 (/) 
0 
..J 
6 
il= -$400 e a. 
Put Call 
Profit Profit 
+$1,800 -$ 200 
+ 800 200 
+ 200 200 
0 200 
200 200 
200 200 
200 200 
200 + 200 
200 + 800 
200 + 1,800 
Stock Price at Expiration 
Part Ill: Put Option Strategies 
Total 
Profit 
+$1,600 
+ 600 
0 
200 
400 
400 
400 
0 
+ 600 
+ 1,600 
viewpoint. The in-the-money strangle purchase certainly involves less percentage 
risk: The buyer can never lose all his investment, since he can always get back 5 
points, even in the worst case (when XYZ is behveen 45 and 50 at expiration). His 
percentage profits are lower with the in-the-money strangle purchase, since he paid 
more for the strangle to begin with. These observations should come as no surprise,