CH09 Trading Strategies Involving Options.ppt

Trading Strategies Involving OptionsChapter 9
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Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Three Alternative Strategies
Take a position in the option and the underlying
Take a position in 2 or more options of the same type (A spread)
Combination: Take a position in a mixture of calls & puts (bination)
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Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Positions in an Option & the Underlying (Figure , page 186)
Profit
ST
K
Profit
ST
K
Profit
ST
K
Profit
ST
K
(a)
(b)
(c)
(d)
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Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Bull Spread Using Calls(Figure , page 187)
K1
K2
Profit
ST
4
Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Bull Spread Using PutsFigure , page 189
K1
K2
Profit
ST
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Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Bear Spread Using CallsFigure , page 189
K1
K2
Profit
ST
6
Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Bear Spread Using PutsFigure , page 190
K1
K2
Profit
ST
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Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Butterfly Spread Using CallsFigure , page 191
K1
K3
Profit
ST
K2
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Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Butterfly Spread Using PutsFigure , page 192
K1
K3
Profit
ST
K2
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Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull
Calendar Spread Using CallsFigure , page 193
Profit
ST
K
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Options, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull