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The green line reflects the situation with three

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Unformatted text preview: time has on the total position. The green line reflects the situation with three months left until expiration, the maroon line the status with 1 month left and the teal line the situation at expiration, which is also reflected in the orange box at the top of each strategy page. Note that decay accelerates as expiry approaches. 3 month 1 month At expiry 0 A Loss Strike price Stock Combinations Event Driven Profit Neutral Bearish Bullish HOW TO UNDERSTAND THE DIAGRAMS 1 LONG CALL Construction: Buy 1 Call at strike price A. Margins: No. Your Market Outlook: Bullish. The share price will rise well above the strike price A. The more bullish your view the further out of the money you can buy to create maximum leverage. Profit: The profit increases as the market rises. The break-even point will be the options strike price A, plus the premium paid for the option. Loss: The maximum loss is the premium paid for the option. Any point between the strike price A, and the break-even point you will make a loss although not...
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