29 lines
974 B
Plaintext
29 lines
974 B
Plaintext
Chapter 34: Futures and Futures Options 687
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FIGURE 34-1.
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January soybean, backspread.
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60
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50
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40
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30 .....
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e 20 a..
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0 10 ~ r:::
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~ 550 600 625
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-20
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-30
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Futures Price
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$50 per point ( which is cents when referring to soybeans) and stock options are worth
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$100 per point do not alter these calculations for a put backspread.
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Maximum upside profit potential= Initial debit or credit of position
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= 15 points
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Maximum risk = Maximum upside Distance between strikes
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x Number of puts sold short
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= 15-50 X 1
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= -35 points
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Downside break-even point = Lower strike
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- Points of risk/Number of excess puts
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= 550- 35/3
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= 538.3
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Thus, one is able to analyze a futures option p~tion or a stock option position
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in the same manner - by reducing everything to be in terms of points, not dollars.
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Obviously, one will eventually have to convert to dollars in order to calculate his prof
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its or losses. However, note that referring to everything in "points" works very well. |