86 lines
2.0 KiB
Plaintext
86 lines
2.0 KiB
Plaintext
314 • Index
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Procter & Gamble, 84
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Productivity, 102
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Profit:
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from covered calls, 245
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from hedging, 254–255
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owners’ cash, 82
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percent, 172–173
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Profit leverage, 179–180, 182–183
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Profitability:
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and financial leverage, 285–286
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and operational leverage,
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283–284
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as value driver, 92, 99–102
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Proprietary trading desks (prop
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traders), 300n5
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Prospect theory, 123–127
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Protective puts, 248–258
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about, 248–250
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BSM cone, 248, 249
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with covered calls, 259–262
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execution of, 250–252
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pitfalls with, 252–258
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Pure Digital, 299n6 (Chapter 5)
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Put options (puts):
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BSM cone for, 54–55
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buying, for protection, 23
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defined, 11
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delta for, 151
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on quotes, 145
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selling, for income, 23
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tailoring exposure with, 24
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visual representation of, 16–18
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(See also Long puts; Protective puts;
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Short puts)
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Put-call parity, 223, 287–293
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defined, 287–288
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and dividend arbitrage, 288–293
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for non-dividend-paying stock,
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289–290
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Q
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Qualcomm, 260–262
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Quotes, option, 144–151
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R
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Random-walk principal, 41
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Ranges of exposure, 3
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for call options, 12–13, 15
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for ITM options, 58–59
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and option pricing, 50–56
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Rankine, Graeme, 41–42
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Ratioing, 206, 238
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Realized losses:
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and buying puts, 203
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immediate, 180, 183
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managing leverage to minimize,
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183–185
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and option buying, 187–188
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unrealized vs., 175–176
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Recessions, leverage during, 198, 199
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Reflective thought processes, 116–118
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Reflexive thought processes, 116–118
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Return(s):
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absolute dollar value of, 172–173
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for covered calls, 244–245
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maximum, 225
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percentage, 229
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for short puts, 245
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(See also Distribution of returns)
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Revenue growth, 92, 97–99
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Risk, 263–268
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career, 263
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counterparty, 7–8
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liquidity, 256, 263
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market, 263–265
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in option investing, 267–268
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perception of, 123–130
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and size of hedges, 255–256
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solvency, 256, 263
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valuation, 265–267
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Risk-averse investors, 123, 125–127
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Risk-free rate:
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borrowing at, 32, 40, 46
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BSM model assumption about, 32,
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35–36, 40, 45–46
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Risk-neutral investors, 124–126
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Risk-seeking investors, 123, 125–127 |