strategy in call_and_put_options

Jun 28th, 2015
Studypool Tutor
Academy of Art University
Price: $20 USD

Tutor description

Definition Microsoft example Logic behind the protective put Synthetic options

Word Count: 1875
Showing Page: 1/28
SPREADSBefore We start !!!!!!!!!!!!What are OptionSpreads???????????????In options trading, an option spread is createdby the simultaneous purchase and saleof options of the same class on the sameunderlying security but with different strikeprices and/or expiration dates.Any spread that is constructed using callscan be referred to as a call spread.VERTICLE SPREADS The vertical spread is an option spread strategy whereby theoption trader purchases a certain number of options andsimultaneously sell an equal number of options of thesame class, same underlying security, same expiration date, butat a different strike price. Vertical spreads limit the risk involved in the options trade butat the same time they reduce the profit potential. They can be created with either all calls or all puts, and can bebullish or bearish.Bull Vertical Spreads Bull vertical spreads are employed when the option trader isbullish on the underlying security and hence, they are designedto profit from a rise in the price of the underlying asset. They can be constructed using calls or puts and are knownas bull call spread and bull put spread respectively. While they have similar risk/reward profiles, the bull callspread is entered on a debit while the bull put spread can beestablished on a credit. Hence, the bull call spread is also called a vertical debitspread while the bull put spread is sometimes referred to as avertical credit spread.

Review from student

Studypool Student
" Totally impressed with results!! :-) "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1830 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors