60 lines
1.3 KiB
Plaintext
60 lines
1.3 KiB
Plaintext
272 Part Ill: Put Option Strategies
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TABLE 17-1.
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Results at expiration on a protected stock holding.
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XYZ Price at Stock Put
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Expiration Profit Profit
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30 -$2,200 +$1,800
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40 - 1,200 + 800
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50 200 200
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54 + 200 200
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60 + 800 200
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70 + 1,800 200
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80 + 2,800 200
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FIGURE 17-1.
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long common stock and long put.
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C:
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0
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e ·5.
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X
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w
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1i'i $0 Cf)
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Cf)
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0 ..J
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c5
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e
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0.
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-$400
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,
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, , ,
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Long ,'
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Stock ,,
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,, ,,
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, , ,
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48 50 ,'52
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, ,, ,
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,, ,
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,
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, ,, ,
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, , ,,
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Stock Price at Expiration
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,, ,,
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,, ,,
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, ,
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Total
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Profit
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-$ 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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+ 2,600
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one's profit potential on the common stock, but rather provides the stock owner with
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protection, eliminating the possibility of any devastating loss on the stock holding during
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the life of the put. In all the put buying strategies discussed in this chapter and Chapter
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18, the put must be paid for in full. That is the only increase in investment.
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Although any common stockholder may use this strategy, two general classes of
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stock owners find it particularly attractive: First, the long-term holder of the stock
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who is not considering selling the stock may utilize the put protection to limit losses
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over a short-term horizon. Second, the buyer of common stock who wants some
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"insurance" in case he is wrong may also find the put protection attractive. |