53 lines
1.0 KiB
Plaintext
53 lines
1.0 KiB
Plaintext
304 Part Ill: Put Option Strategies
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TABLE 20-1.
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Results at expiration of covered straddle write.
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Stock (A) 100-Shore (8) Put
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Price Covered Write Write
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35
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40
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46
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50
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60
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FIGURE 20-1.
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-$1, 100
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600
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0
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+ 400
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+ 400
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Covered straddle write.
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+$800
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§ +$400
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e ·5.
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~
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al
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en $0 en 0 ...J
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c5
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e a. ~,
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,,' ,, ,,
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,, ,,
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,, ,,
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,,
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-$1, 100
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600
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0
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+ 400
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+ 400
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100-Share Covered
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Call Write
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~-----------------►
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, 46 50
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Stock Price at Expiration
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Covered Straddle
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Write (A+ 8)
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-$2,200
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- 1,200
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0
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+ 800
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+ 800
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is below 46 at expiration. The covered straddle writer loses money twice as fast on
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the downside, since his position is similar to a 200-share covered write. Because the
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commissions are smaller for the naked put write than for the covered call write, the
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covered call writer who adds a naked put to his position will generally increase his
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return somewhat.
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Follow-up action can be implemented in much the same way it would be for a
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covered call write. Whenever one would normally roll his call in a covered situation, |