1-11-16 - -short call = the obligation to short a futures...

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Derivatives November 16 *Variable Put Write -long stock (P) -short in-the-money put (S1) -short out-of-the-money put (S2) -Max Profit = c1 + c2 9S1 – P -Downside BE = S1 – MP -Upside BE = S2 + MP *Ratio Put Write -DON’T DO…because the short put might be assigned due to a long put exercising early *Ratio Spread -long call @ S1 -short x# of calls @ s2 -s1 < s2 *Naked Straddle Write -short call -short put *An option on a futures contract -the underlying asset is not a stock -the underlying asset is a futures contract *Call Futures Option -long call = the right to long a futures contract
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Unformatted text preview: -short call = the obligation to short a futures contract *Put Futures Option-long put = the right to short a futures contract-short put = the obligation to long a futures contract *Futures Options-Futures options = FO-No delivery occurs-Commodities are settled in cash-Financials might take delivery-One Option = one futures contract-Expiration >Financial options ~same date as futures contract expiration >Commodity options ~expire month prior to future contract expiration-Pricing >FO prices listed as “units” >each “unit” has a $ value...
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