asx_UnderstandingOptionStrategies

Margins yes your market outlook bullish the share

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Unformatted text preview: A. Margins: Yes. Your Market Outlook: Bullish. The share price rise above A and not fall below A. It is similar to holding the underlying share. Profit: The maximum profit is unlimited. As the share price rises above the strike price A, so does your profit. Loss: The maximum loss for this trade is the strike price A, as the share price is limited to zero, plus or minus the cost of the trade. Volatility: You are not affected by volatility. Time Decay: You are not affected by time decay. Profit 0 A Loss Construction: Sell 1 Put at strike price A and Buy 1 Call at strike price B. Margins: Yes. Your Market Outlook: Bullish. The share price will rise above B and not fall below A. Profit: The maximum profit is unlimited. As the share price increases above the strike price B, so does your profit. Loss: The maximum loss for this trade is the strike price A, as the share price is limited to zero. Volatility: Volatility effect is minimal. Time Decay: It depends on the underlying share price. If...
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This note was uploaded on 08/30/2009 for the course FINM 3405 taught by Professor Philipgray during the Three '09 term at Queensland.

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