1. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10

2. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.2 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 (A combination)

3. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.3 Positions in an Option & the Underlying (Figure 10.1, page 230) Profit STST K STST K STST K STST K (a) (b) (c)(d)

4. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.4 Bull Spread Using Calls (Figure 10.2, page 231) K1K1 K2K2 Profit STST

5. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.5 Bull Spread Using Puts Figure 10.3, page 233 K1K1 K2K2 Profit STST

6. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.6 Bear Spread Using Puts Figure 10.4, page 233 K1K1 K2K2 Profit STST

7. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.7 Bear Spread Using Calls Figure 10.5, page 234 K1K1 K2K2 Profit STST

8. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.8 Butterfly Spread Using Calls Figure 10.6, page 237 K1K1 K3K3 Profit STST K2K2

9. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.9 Butterfly Spread Using Puts Figure 10.7, page 238 K1K1 K3K3 Profit STST K2K2

10. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.10 Calendar Spread Using Calls Figure 10.8, page 238 Profit STST K

11. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.11 Calendar Spread Using Puts Figure 10.9, page 239 Profit STST K

12. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.12 A Straddle Combination Figure 10.10, page 240 Profit STST K

13. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.13 Strip & Strap Figure 10.11, page 241 Profit KSTST KSTST StripStrap

14. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.14 A Strangle Combination Figure 10.12, page 242 K1K1 K2K2 Profit STST

15. Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.15 Suggested Practice Problems: All Quiz Questions (10.1 – 10.7) 10.10 10.12 10.15 10.17