... time period. The put owner has the right
to ‘put the underlying to the opposing party. The
other party, the put seller, consequently incurs the
potential obligation to purchase the underlying.
Buying ... components.
The first of these is the amount equal to the difference between the strike
price and the price of the underlying, and it is termed the...
... want to know about theory.) Then together we
devised trade recommendations which the brokers passed on to their
clients.
The clients did well. One of them took one of our recommendations and ... as a potential sale of the index (the ETF)
at 1 13, and a potential buy of the index at 111. For this profit potential
you pay a premium.
In order to assess the profit/loss po...
... expect the stock to range, and for volatility to come down.
The expiry profit/loss is shown in Table 12 .3.
Table 12 .3 Marks and Spencer short April 33 0 34 0 36 0 37 0 iron
condor
M&S
32 0.0 33 0.0 ... 1.
2
Table 12.4 shows the expiration
profit/loss.
Table 12.4 Marks and Spencer long April 33 0 34 0 36 0 37 0 iron
condor
M&S
32 0.0 33 0.0 33 4.5 34 0.0...
... on the other hand, you sell the call at 34 .40 and pay 33 .70 for the put,
then you have sold the synthetic future at 1140.70. Here, you have the
obligation to sell the future above 1140, and the ... Futures, synthetics and put–call parity 2 23
On the other hand, the holder of the long futures position forgoes the
dividends payable for the next six weeks,...
... expiry
Marks and Spencer
33 0 34 0 35 0 36 0 37 0
Debit from long 34 0 synthetic
–11
Value of long 34 0 synthetic
at expiry
–10 0 10 20 30
Debit from short 36 0
synthetic
–9
Value of short 36 0 synthetic ... connect the four dots at 34 0 and 36 0 then the picture looks like
a box.
Questions and answers 247
3 In the UK, the FTSE-100 share index is currently...