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Transcript of Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1...
![Page 1: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/1.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.1
Trading Strategies Involving Options
Chapter 10
![Page 2: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/2.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.2
Three Alternative Strategies
Take a position in the option and the underlying
Take a position in 2 or more options of the same type (A spread)
Combination: Take a position in a mixture of calls & puts (A combination)
![Page 3: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/3.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.3
Positions in an Option & the Underlying (Figure 10.1, page 230)
Profit
STK
Profit
ST
K
Profit
ST
K
Profit
STK
(a) (b)
(c)
(d)
![Page 4: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/4.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.4
Bull Spread Using Calls(Figure 10.2, page 231)
K1 K2
Profit
ST
![Page 5: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/5.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.5
Bull Spread Using PutsFigure 10.3, page 233
K1 K2
Profit
ST
![Page 6: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/6.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.6
Bear Spread Using PutsFigure 10.4, page 233
K1 K2
Profit
ST
![Page 7: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/7.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.7
Bear Spread Using CallsFigure 10.5, page 234
K1 K2
Profit
ST
![Page 8: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/8.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.8
Butterfly Spread Using CallsFigure 10.6, page 237
K1 K3
Profit
STK2
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Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.9
Butterfly Spread Using PutsFigure 10.7, page 238
K1 K3
Profit
STK2
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Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.10
Calendar Spread Using CallsFigure 10.8, page 238
Profit
STK
![Page 11: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/11.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.11
Calendar Spread Using PutsFigure 10.9, page 239
Profit
STK
![Page 12: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/12.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.12
A Straddle CombinationFigure 10.10, page 240
Profit
STK
![Page 13: Fundamentals of Futures and Options Markets, 6 th Edition, Copyright © John C. Hull 2007 10.1 Trading Strategies Involving Options Chapter 10.](https://reader035.fdocuments.us/reader035/viewer/2022062503/5a4d1ae57f8b9ab059978b04/html5/thumbnails/13.jpg)
Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.13
Strip & StrapFigure 10.11, page 241
Profit
K ST
Profit
K ST
Strip Strap
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Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.14
A Strangle CombinationFigure 10.12, page 242
K1 K2
Profit
ST
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Fundamentals of Futures and Options Markets, 6th Edition, Copyright © John C. Hull 2007 10.15
Suggested Practice Problems:
All Quiz Questions (10.1 – 10.7)10.1010.1210.1510.17