41 lines
1016 B
Plaintext
41 lines
1016 B
Plaintext
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 |