Options Trading Strategies
About the Lecture
The lecture Options Trading Strategies by Edu Pristine is from the course Archiv - Financial Markets and Products. It contains the following chapters:
- Trading Strategies
- Covered Call
- Protective Put
Author of lecture Options Trading Strategies
Edu Pristine
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Excerpts from the accompanying material
... Traders may create positions using different kinds of strategies depending ...
... Maximum profits when the options are exercised by the buyer: Premium received + Strike Price - Spot Price. If the options are not exercised the trader gets to ...
... option for $100, for a net cost of only $3200. The $100 premium received for the call will cover a $1 decline in stock price. The break-even point of the transaction is $32/share. Upside potential is limited to $300, but this amounts to a return of almost 10% ...
... albeit the amount of profit is reduced by the premium paid to purchase the put. In case the price ...
... With the help of computer programs available today the binomial method can be used with very small time intervals. If one can think of infinitesimally small time inte rvals, one could have a continuum of stock prices a s reflected in the plot below: ...
... Exercise price (EX) 85 Standard deviation of continuously compounded annual returns (σ) 0.4069 Year to maturity (t) 0.5 Risk-free interest rate per annum, r f 4% Log [P/PV (EX)] 0.02 Log [P/PV (EX)] / σ √t 0.07 -0.01 σ √t/2 0.14 0.14 d1 = log [P/PV (EX)] / σ √t + ...
... Historical variability in stock price returns, backward looking, calculated by using historical share prices ...
... Not suitable for valuing warrants as warrants are l ong term options and it is quite likely that the underlying stock will pay dividends during the life of the war rant. ...
... impossible to quantify risks associated with options. Options can be valued using the binomial method, replicating options, risk ...
... Replicating a put option, construct a package containing, sell delta stocks and deposit a sum of money which is equal to the difference between the pay-offs from the option and pay o ffs from the delta ...
... Neutral Method Determine the probability of upside and downside changes in stock ...
... to pay the buyer €40,000 for a call option to repurchase the property for €200,000 at the end of 2 years. In effect, with this transaction Company X “borrows” money from the buyer. ...
