Chapter 11 Trading Strategies Involving Options Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 20121

Strategies to be Considered Stock plus option Two or more options of the same type (a spread) Two or more options of different types (a combination) Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull

Positions in an Option & the Underlying (Figure 11.1, page 237) Profit STST K STST K STST K STST K (a) (b) (c)(d) 3

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 Bull Spread Using Calls (Figure 11.2, page 238) K1K1 K2K2 Profit STST 4

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 Bull Spread Using Puts Figure 11.3, page 239 K1K1 K2K2 Profit STST 5

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 Bear Spread Using Puts Figure 11.4, page 240 K1K1 K2K2 Profit STST 6

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 Bear Spread Using Calls Figure 11.5, page 241 K1K1 K2K2 Profit STST 7

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 Butterfly Spread Using Calls Figure 11.6, page 242 K1K1 K3K3 Profit STST K2K2 8

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 Butterfly Spread Using Puts Figure 11.7, page 243 K1K1 K3K3 Profit STST K2K2 9

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 A Straddle Combination Figure 11.10, page 246 Profit STST K 10

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 Strip & Strap Figure 11.11, page 248 Profit KSTST KSTST StripStrap 11

Options, Futures, and Other Derivatives, 8th Edition, Copyright © John C. Hull 2012 A Strangle Combination Figure 11.12, page 249 K1K1 K2K2 Profit STST 12