511
OPTION TrAdINg STrATegIeS
amount greater than the diff  erence between the futures price at the time of the option sale and the 
strike price. The trade will be profi  table as long as the futures price at the time of the option expira-
tion is not below the strike price by more than the option premium ($10.10/oz in this example). 
The short out-of-the-money put represents a less bullish posture than the short at-the-money put 
 tabLe 35.6b     profit/Loss Calculations: Short put (Out-of-the-Money)  
(1) (2) (3) (4) (5)
 Futures price at 
expiration ($/oz) 
 premium of august $1,100 
put at Initiation ($/oz) 
 Dollar amount of 
premium received 
 Value of put 
at expiration 
 profit/Loss on 
position [(3) – (4)] 
1,000 10.1 $1,010 $10,000 –$8,990
1,050 10.1 $1,010 $5,000 –$3,990
1,100 10.1 $1,010 $0 $1,010
1,150 10.1 $1,010 $0 $1,010
1,200 10.1 $1,010 $0 $1,010
1,250 10.1 $1,010 $0 $1,010
1,300 10.1 $1,010 $0 $1,010
1,350 10.1 $1,010 $0 $1,010
1,400 10.1 $1,010 $0 $1,010
Price of August gold futures at option expiration ($/oz)
Futures price at time
of position initiation
Breakeven price
= $1,089.90
Profit/loss at expiration ($)
1,000
−10,000
2,500
−2,500
−5,000
−7,500
0
1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400
Strike price
    FIGURE   35.6b    Profi  t/loss Profi  le: Short Put (Out-of-the-Money)