46 lines
837 B
Plaintext
46 lines
837 B
Plaintext
Option Fundamentals • 17
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5/20/2013 249 499
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Date/Day Count
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Stock Price
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749 999
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OTM
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ATM
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ITMGREEN
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We are assuming that this put option costs $5, leading to a breakeven
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line of $45. This breakeven line is like an upside-down hurdle in that we
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would like the stock to finish below $45; if it expires below $50 but above
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$45, again, we will be able to profit from the exercise, but this profit will not
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be great enough to cover the cost of the option.
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5/18/2012
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20
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80
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120
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140
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160
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180
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200
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5/20/2013 249 499
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Date/Day Count
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Stock Price
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749 999
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Breakeven Line: $45.00
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GREEN
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Obviously, if we can gain downside exposure to a stock, we must be
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able to accept it as well. We can accept downside exposure by selling a put;
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this book represents a sold put graphically like this: |