59 lines
912 B
Plaintext
59 lines
912 B
Plaintext
290
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TABLE 18-2.
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Results at expiration of a strangle purchase.
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XYZ Price at
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Expiration
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25
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35
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41
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43
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45
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47
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50
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54
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60
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70
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FIGURE 18-2.
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Strangle purchase.
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C:
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0
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~ ·c.
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X
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w
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1ii
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(/) $0 (/)
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0
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..J
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6
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il= -$400 e a.
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Put Call
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Profit Profit
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+$1,800 -$ 200
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+ 800 200
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+ 200 200
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0 200
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200 200
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200 200
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200 200
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200 + 200
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200 + 800
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200 + 1,800
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Stock Price at Expiration
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Part Ill: Put Option Strategies
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Total
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Profit
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+$1,600
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+ 600
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0
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200
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400
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400
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400
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0
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+ 600
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+ 1,600
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viewpoint. The in-the-money strangle purchase certainly involves less percentage
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risk: The buyer can never lose all his investment, since he can always get back 5
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points, even in the worst case (when XYZ is behveen 45 and 50 at expiration). His
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percentage profits are lower with the in-the-money strangle purchase, since he paid
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more for the strangle to begin with. These observations should come as no surprise, |