More On Options

B/E=S+P B/E=S+P Straddles Spreads Long-Call/Put Long/Short Call call up LC SC quot;spread acrossquot; Short-Call/Put Long/Short Put put down LP SP quot;straddle up and downquot; buy-left sell right Income Hedging B/E=S-P B/E=S-P Long Stock/Short call Long Stock/Long Put a right an obligation Short Stock/Short put Short Stock/Long Call Plus on top & minus on the bottom for B/E's Spreads - desired direction is determined by option with larger premium (debit widen & credit narrow) or (dead wives can't nag) Amount the spead widens or narrows is exactly what you make or lose, the spread is just the difference between the 2 premiums. Breakevens: Call spreads: Lower strike + net prem ( For calls: Lower Add-LA net credit or debit ) Debit call spreads are bull Put spreads: Higher strike - net prem (For Puts: Higher Subtract-HS net credit or debit) Debit put spreads are bear Debit - option bought cost more- you owe a debt Credit call spreads are bear Credit - option sold cost more (you got paid) Credit put spreads are bull Margin Req. = net debit buy call LOWER - S.P. & longer exp. Date Margin Req, lower of: buy put HIGHER - S.P. & longer exp. Date difference in S.P. Debit spreads widen - exercise Credit spreads narrow - expire margin on short position Straddles - simultaneous buy or sell: Same quot;seriesquot; of information: Call & a put series = same S tock SES Long straddler expects fluctuation series = same E xpiration SES Profits when price goes higher or lower than breakeven series = same S trike SES Straddles Short straddler expects volatility Long - buy call/buy put (same SP & Exp) Profits when price stays between the two breakeven prices by keeping premium Short - sell call/sell put (same SP & Exp)

More On Options

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More On Options

by WHodge123

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