fm3_chapter16 - Call Option Payoff Patterns Time 0 Time T...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Call Option Payoff Patterns Time 0 Time T Put Option Payoff Patterns Time 0 Time T Purchase call option, cash flow < 0 Terminal call payoff, Max[S T - X,0] > 0 Between times 0 and T: Cash flow = 0 for European option Cash flow > 0 for American option Write (I.e., issue) call option, cash flow > 0 Pay terminal call payoff = - Max[S T - X, 0] < 0 Between times 0 and T: Cash flow = 0 for European option Cash flow < 0 for American option Purchase put option, cash flow < 0 Terminal put payoff, Max[X - S T ,0] > 0 Between times 0 and T: Cash flow = 0 for European option Cash flow > 0 for American option Write (I.e., issue) call option, cash flow > 0 Pay terminal call payoff = - Max[X - S T , 0] < 0 Between times 0 and T: Cash flow = 0 for European option Cash flow < 0 for American option
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Cash flows of call buyer Cash flows of call writer Cash flows of put buyer Cash flows of put writer
Background image of page 2
MOST ACTIVE OPTIONS, 3 OCTOBER 2 Stock Rank Symbol Name 1 #REF! Halliburton 20-Apr-07 27.5 Put 2 #REF! Halliburton 19-Jan-07 27.5 Put 3 HAL Halliburton 19-Jan-07 30.0 Put 4 QQQQ Nasdaq 100 Index 20-Oct-06 40.0 Put 5 HAL Halliburton 20-Apr-07 22.5 Put 6 IWM Russell 2000 Index 17-Nov-06 70.0 Put 7 QQQQ Nasdaq 100 Index 17-Nov-06 39.0 Put 8 IWM Russell 2000 Index 20-Oct-06 72.0 Put 9 SPY S&P Depository Receipts ("Spider") 15-Dec-06 120.0 Put 10 SPY S&P Depository Receipts ("Spider") 15-Dec-06 139.0 Call 11 SPY S&P Depository Receipts ("Spider") 15-Dec-06 126.0 Put 12 IWM Russell 2000 Index 20-Oct-06 71.0 Put 13 QQQQ Nasdaq 100 Index 20-Oct-06 40.0 Call 14 BMY Bristol-Myers Squibb 20-Oct-06 22.5 Call 15 SPY S&P Depository Receipts ("Spider") 20-Oct-06 125.0 Put 16 S Sprint Nextel 17-Nov-06 17.5
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/23/2011 for the course FGB 780 taught by Professor Edwardchang during the Spring '09 term at Missouri State University-Springfield.

Page1 / 21

fm3_chapter16 - Call Option Payoff Patterns Time 0 Time T...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online