tailieunhanh - Option Strategies Profit Making Techniques for Stock Index and Commodity Options 2nd Edition_10

Tham khảo tài liệu 'option strategies profit making techniques for stock index and commodity options 2nd edition_10', tài chính - ngân hàng, đầu tư chứng khoán phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Bull Spreads 195 TABLE Bull Call Spread Results and Short Call Results Price Bull spread Short call 640 -27 8 -17 8 645 -27 8 -17 8 6477 8 0 -17 8 650 21 8 -17 8 655 21 8 -4 660 21 8 -9 or a long put. The net effect is that you have liquidated the bull spread and are now taking a more bearish stance on the market. Your rationale might be that the market was only somewhat bullish at higher levels but has become bearish because of new information or because the UI price broke a key price support level. Look at the bull call spread used in Table as an example. Assume the market rallied to 660 the day after you entered the bull spread the 645 call is now selling for 20 and the 650 is selling at 17. Your choice is between sticking with the bull call spread or liquidating the long 645 call. Table shows the results at different price levels for these two strategies. Remember that shifting to a short call at this point means that you are starting out with a loss of 27 8. This loss is counted in the results of the short call. Notice that in this example you can never make a profit. The effect of going naked short the call is to reduce your loss on the original bull spread by capturing additional time premium if the UI price continues lower. The only way you can make a profit by liquidating the long call is if the premium on the short call is larger than the loss on the original bull spread. Liquidating the short put makes more sense if you originally put on a bull put spread because the long put has much greater profit potential than the short call. The net result is that converting a bull call spread into a short call will rarely make sense but converting it into a long put can often be an attractive tactic if you are now bearish. CHAPTER 16 Bear Spreads Strategy Price Action Implied Volatility Time Decay Gamma Profit Potential Risk Bear Spreads Bearish Increasing Helps Hurts Helps Limited Limited STRATEGY A bear spread is a bearish strategy with both .