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Guide to Successful Strategies Financial Times Guides by Jordan Lenny 9 docx

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_1 pot

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_1 pot

... 117 .90 118 1 19 120 121Spread debit–0 .90 Value of spread at expiration0 0 0.00 0 .90 1.00 2.00 2.00 2.00Profit/loss–0 .90 –0 .90 –0 .90 0.00 0.10 1.10 1.10 1.10*Short call spreadNeutral to ... SPY June 117–1 19 call spreadSPDR115 116 117 117 .90 118 1 19 120 121Spread credit0 .90 Value of spread at expiration0 0 0.00 0 .90 1.00 2.00 2.00 2.00Profit/loss0 .90 0 .90 0 .90 0.00 –0.10 ... –7.50 –4. 59 –2.50 0.00 0.00 0.00 0.00Profit/loss– full amt –5.41 –2 .91 0.00 2. 09 4. 59 2. 09 0.00 –0.41In graphic form, the expiration profit/loss of this spread is shown in Figure 9. 2.2460–2–4–6–8–1032.535...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_2 ppt

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_2 ppt

... obligated to pay 45 for the stock. Because your spread was traded for a debit of 0. 29 your effective purchase price will be the strike price of the put plus the cost of the spread, or 95 + 0. 29 = 95 . 29. ... of the spread, or 95 + 0. 29 = 95 . 29. No matter how far the stock declines below 95 , you will still be obligated to purchase it for an effective cost of 95 . 29. Because of the naked short put, ... profit one to one with the decline of the stock, or you hedge your investment one to one.On the upside, your spread behaves like a short 60 call for which you have paid 0 .96 . If the stock closes...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_3 pdf

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_3 pdf

... butterfly is too limited, it can be extended by shifting the short put spread to the next two lower strikes. If XYZ is at 100, you could buy one 100 put, sell one 95 put, sell one 90 put, and ... long call butterfly in stocks, you may be assigned an unwanted short stock position, and with a long put butterfly in stocks, you may be assigned an unwanted long stock position. In all these ... spreads and put spreads 1 39 For example, if you expect Marks and Spencer to retrace to 330, you could pay 0.75 for the April 320–330–340 put butterfly. You do this by paying 6.25 for the 340...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_4 pptx

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_4 pptx

... decline, and in the meantime, to earn income.Have you ever heard of an insurance policy that paid you to be insured? On 19 October 198 7, no amount of calls sold protected stockholders from the enormous ... 0.00 0.77 7.33 9. 83 12.33Total profit/loss(–full amt) –8.44 –5 .94 –3.44 –0.77 0.00 6.56 9. 06 11.56A story and a bit of advice With the covered write, it is important not to think in terms ... have different behaviour due to early exercise. Puts on stocks are more likely to be exercised early if trading at parity, because a put is the right to sell the stock and raise cash.Because...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_5 pptx

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_5 pptx

... 0.56 1.14 0 .94 2.86 2.36 2800 87.60 0.58 0.66 1.20 1.37 3.12 3.562850 59. 80 0.47 0. 79 1.17 1 .96 3.18 5.32 290 0 37.70 0.35 0 .93 1.04 2.76 2 .97 7.88 295 0 22.00 0.24 1. 09 0.85 3.86 2. 49 11.323000 ... 0.81 0.44 3 .9 2.1 2750 1 49. 40 0.64 0.43 0.84 0.56 4.2 2.82800 116.80 0.56 0.48 0.85 0.73 4.5 3 .9 2850 88.10 0.48 0.54 0.83 0 .94 4.5 5.1 290 0 63.80 0.40 0.63 0.76 1. 19 4.4 6 .9 295 0 44.20 0.32 ... results. This leads to traders trying to meet short-term targets, and then to over-trading, and then to racking up commissions, and then to taking undue risk, and then sometimes to a blowout. This...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_6 potx

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_6 potx

... implied volatilityPut value Put implied volatility130 1.32 9. 44 3. 29 9.45132 0. 59 9.54134 0.34 9. 58136 0.20 9. 84138 0.11 9. 98140 0.07 10.45142 0.04 10.70144 0.02 10.76146 0.01 10.86Source: ... 10.42 0.03 123 0.05 9. 92 0.06 124 0.07 9. 00 0.08 125 0.14 8 .91 0.14 126 2.26 8. 59 0.77 0.25 8.68 0.23 127 1.44 8.44 0.65 0.42 8.42 0.35*128 1.05 8.14 0.51 1.04 8.26 0. 49 1 29 0.43 8.30 0.36 ... 0.81 31 .92 545 2.00 25 .98 550 2.38 25.06555 2.75 23 .90 570 4.50 20.56575 21.00 20.75580 17.13 19. 60 6.75 18.87585 13.50 18.44 8.38 18.21* 590 10.50 17.82 10.50 17.82 595 7.75 16 .98 600 5.38...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_7 doc

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_7 doc

... more than short-term interest rates in order to compensate for the risk of owning stock. This was a holdover from the crash of 192 9, when many stock-holders’ investments were wiped out. The ... positions are used primarily by professional market-makers to simplify the view of their options inventory in order to manage risk better. They are of little practical use to traders who take options ... and reversals on individual stocks and on other stock indexesThe conversion and reversal markets on stocks operate in basically the same manner. Remember that with stocks there are no futures...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_8 pptx

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_8 pptx

... 0P/L1. 29 0. 79 0. 29 0 –0.21 –0.21 –0.21(i) 4 (a) 68. 49 (b) 68. 49 (c) 1.51(d) 68. 49, 1.51, 68. 49 (e) Obligation to buy stock at the strike price minus income from put: 70.00 – 1.51 = 68. 49 (f) ... 0.00 0.00P/L–13. 49 –8. 49 –3. 49 0 1.51 1.51 1.51–0.1821.510.50–0.51818.5–0.18 –0.180.320.821.321.82 19 19. 5 20 20.5 21Answer 3i Questions and answers 2 59 10 It is the third ... The stock is at 74.16, and it has been ranging from 72.50 to 77.00 during the past two weeks, and you expect it to continue to do so for the foreseeable future. You would like to continue to...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_9 docx

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_9 docx

... £1.56)4 (a) 91 + 1 .9 = 92 .90 ; 92 90; 90 – 1.80 = 88.20; 8820(b) 90 .56 × 0.03 = 2.72; 90 .56 – 2.72 = 87.84(c) Long December 90 –87 put spread(d) 1.8 – 1 = 0.8 (e) 3 – 0.8 = 2.2 = $220; $80; 90 – 0.8 ... market stasis. Questions and answers 2753 (a) 193 – 154 = 39p; 0. 39 × £1,000 = £ 390 (b) 5400 – 39 = 5361(c) [5400 – 5300] – 39 = 61(d) 39 (e) 39 ÷ 61 = 64p at risk for each potential return ... expirationStrike87 88 89 90 91 92 93 94 December calls3.2 2.6 1 .9 1.3 1.1 0.6December puts1 1.1 1.5 1.8 2.2(a) What is the break-even level for a purchase of one straight December 91 call? What...
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Guide to Successful Strategies Financial Times Guides by Jordan Lenny_10 doc

Guide to Successful Strategies Financial Times Guides by Jordan Lenny_10 doc

... priced at 1,000 – 3 = 99 7. The market for the box is probably 99 5 – 99 9.(b) Purchase boxes in the FTSE to lend, sell boxes to borrow.(c) 99 7 = (572.5 – 81) – (35.5 + ?) ? = 99 7 – 572.5 + 81 + ... i) 17.5 + 17.5 – 8 – 8 = 19 creditii) 600 + 19 = 6 19 iii) 500 – 19 = 481iv) [650 – 600] – 19 = 31v) [500 – 460] – 19 = 21vi) 19 vii) 6 19 – 481 = 138(b) i) 34 + 39. 5 – 8 – 8.5 = 57.5 creditii) ... at 90 August options with 90 days until expirationStrike45.00 47.50 50.00 52.50 55.00 57.50 60.00Calls4.04 2.52 1.45 0. 79 0.34Puts0.82 1.30 2.05 2 .90 4.25 Questions and answers 299 Chapter...
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