OPTIONS Stock price at end of holding period Profit (in dollars) BUY STOCK BUY STOCK DEC; S = $164 BE = $164 AT P = $180, = ($1600)

OPTIONS Stock price at end of holding period Profit (in dollars) DEC; S = $164 BE = $164 AT P = $180, SELL STOCK SHORT =( $1600)

OPTIONS Stock price at expiration Profit (in dollars) BUY CALL DEC; S = $165, C = $5.75 BE = $164 + $5.75 = $ AT P = $180, = $925 Maximum Loss = $575

OPTIONS Stock price at expiration Profit (in dollars) BUY CALL: DIFFERENT EXERCISE PRICES A higher strike price results in smaller gains on the upside but smaller losses on the downside DEC JULY 160, 165, 170

OPTIONS Stock price at expiration Profit (in dollars) SELL CALL Maximum profit = $575 DEC JULY 165 BE = $ AT P = $180, = ($925) Maximum loss = infinity

OPTIONS Stock price at expiration Profit (in dollars) SELL CALL DIFFERENT EXERCISE PRICES DEC JULY 160, 165, A higher strike price results in smaller gains on the downside but smaller losses on the upside

OPTIONS Stock price at expiration Profit (in dollars) BUY PUT DEC JULY 165 P = $6 BE = $159 AT P = $150, = ($900) MAXIMUM PROFIT = $1599 MAXIMUM LOSS = $600

OPTIONS Stock price at expiration Profit (in dollars) BUY PUT: DIFFERENT EXERCISE PRICES DEC JULY 160, A lower strike price results in smaller gains on the downside but smaller losses on the upside

OPTIONS Stock price at expiration Profit (in dollars) SELL PUT DEC JULY 165 P = $6 BE = $159 AT P = $150, = ($900) MAXIMUM PROFIT = $600 MAXIMUM LOSS = $15,900

OPTIONS Stock price at expiration Profit (in dollars) SELL PUT: DIFFERENT EXERCISE PRICES DEC JULY 160,165,

OPTIONS Stock price at expiration Profit (in dollars) COVERED CALL DEC JULY 165 C= $5.75 S = $164 BE = $ MAXIMUM PROFIT = $675 MAXIMUM LOSS = $15,825 (BUY STOCK)

OPTIONS Stock price at expiration Profit (in dollars) COVERED CALL: DIFFERENT EXERCISE PRICES DEC JULY 160,165, A lower strike price offers the most downside protection but at the expense of more of the upside gain

OPTIONS Stock price at expiration Profit (in dollars) PROTECTIVE PUT Maximum Loss = $500 DEC JULY 165; P =$6; S = $164 Breakeven = $170 Maximum profit = infinity

OPTIONS Stock price at expiration Profit (in dollars) PROTECTIVE PUT; DIFFERENT EXERCISE PRICES DEC JULY 165, 165, 170 A higher strike price offers the most downside protection but at the expense of more of the upside gain