VIII: Options 25: Options Strategies. Chapter 25: Options Strategies © Oltheten & Waspi 2012 Strategies  Shares Options Strategies combine one or more.

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Presentation transcript:

VIII: Options 25: Options Strategies

Chapter 25: Options Strategies © Oltheten & Waspi 2012 Strategies  Shares Options Strategies combine one or more  Shares  Calls  Puts

Chapter 25: Options Strategies Shares Long Short © Oltheten & Waspi 2012

Chapter 25: Options Strategies Calls © Oltheten & Waspi 2012 LongShort

Chapter 25: Options Strategies Puts © Oltheten & Waspi 2012 Long Short

Chapter 25: Options Strategies © Oltheten & Waspi 2012 Covered Call:  Short $40 March GE $2.50  Long 100 GE $40

Chapter 25: Options Strategies Short $40 March GE $2.50 © Oltheten & Waspi 2012 $250

Chapter 25: Options Strategies Long 100 GE $40 © Oltheten & Waspi 2012

Long Shares -$4000 Short $40 Call $250 Covered Call -$3,750

Chapter 25: Options Strategies © Oltheten & Waspi 2012 Bear Spread:  Short $30 March GE $10.20  Long $40 March GE $2.50

Long $40 Call -$250 Short $30 Call $1,020 Bear Spread

Chapter 25: Options Strategies Bear Spread © Oltheten & Waspi 2012

Chapter 25: Options Strategies © Oltheten & Waspi 2012 Bear Spread  -100 (P-$30) + $770 = $0  P= $37.70

Chapter 25: Options Strategies © Oltheten & Waspi 2012 Bear Spread  Is there a breakeven price >$40?  -100 (P-$30) (P-$40) + $770  -100P + $ P - $4000 +$770  -$230

Chapter 25: Options Strategies Bear Spread © Oltheten & Waspi 2012 $770 -$230

Chapter 25: Options Strategies © Oltheten & Waspi 2012 Bull Spread:  Long $40 March GE $2.50  Short $50 March GE $0.15

Short $50 Call +$15 Long$40 Call -$250 Bull Spread -$235 $765

Chapter 25: Options Strategies Bull Spread © Oltheten & Waspi 2012

Chapter 25: Options Strategies © Oltheten & Waspi 2012 Bull Spread  100 (P-$40) - $235 = $0  P= $42.35

Chapter 25: Options Strategies © Oltheten & Waspi 2012 Butterfly Spread  Long 1 $35 June GE Call at $6.70  Short 2 $40 June GE Calls at $3.80  Long 1 $45 June GE Call at $1.75

Chapter 25: Options Strategies Butterfly Spread © Oltheten & Waspi 2012

Chapter 25: Options Strategies Butterfly Spread © Oltheten & Waspi $85

Chapter 25: Options Strategies Write (Short) Straddle © Oltheten & Waspi 2012

Chapter 25: Options Strategies Buy (Long) Straddle © Oltheten & Waspi 2012

Chapter 25: Options Strategies Synthetic Stock  Use options contracts to synthesize a long position in the stock © Oltheten & Waspi 2012 Long 100 $40

Options II

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