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Unformatted text preview: Long a Bull Spread and Long Bear Spread at the same strikes. Short a Bull Spread and Short a Bear Spread at the same strikes. Long the underlying and Synthetic Short. Short the Underlying and Synthetic Long. Margins: Depends upon how it is constructed. Your Market Outlook: These spreads are usually referred to as "locked trades" because their value at expiration is totally independent of the price of the underlying instrument. Profit: The only profit is made if you can buy it for less than fair value or sell it for more that fair value. Loss: The only loss is made if you buy it for more than fair value or sell it for less than fair value. Volatility: You are not affected by volatility. Time Decay: You are not affected by time decay. Profit 0 Loss Stock Combinations GLOSSARY
Assignment: The random allocation of an exercise obligation to an option seller. At-the-money: When the price of the shares equals the exercise price. Call Option: A contract that entitles the buyer to buy a fixed number...
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