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OPTIONS

BUY STOCK DEC; S = $164 BE = $164 AT P = $180,. = ($1600). 2500. 2000. 1500. 1000. 500. 0. -500. -1000. -1500. -2000. 140. 150. 160. 170. 180. 190. OPTIONS. BUY STOCK. Profit (in dollars). Stock price at end of holding period. 2500. 2000. 1500. 1000. 500. 0. -500.

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OPTIONS

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  1. BUY STOCKDEC; S = $164BE = $164AT P = $180, = ($1600) 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 OPTIONS BUY STOCK Profit(in dollars) Stock price at end of holding period

  2. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC; S = $164BE = $164AT P = $180, OPTIONS SELL STOCK SHORT =( $1600) Profit(in dollars) Stock price at end of holding period

  3. DEC; S = $165, C = $5.75BE = $164 + $5.75 = $170.75AT P = $180, = $925 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 OPTIONS BUY CALL Profit(in dollars) Maximum Loss = $575 Stock price at expiration

  4. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 160, 165, 170 OPTIONS BUY CALL: DIFFERENT EXERCISE PRICES A higher strike price results in smaller gains on the upside but smaller losses on the downside Profit(in dollars) 170 165 160 Stock price at expiration

  5. = ($925) 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 165BE = $170.75AT P = $180, OPTIONS SELL CALL Profit(in dollars) Maximum profit = $575 Maximum loss = infinity Stock price at expiration

  6. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 160, 165,170 OPTIONS SELL CALLDIFFERENT EXERCISE PRICES A higher strike price results in smaller gains on the downside but smaller losses on the upside Profit(in dollars) 160 165 170 Stock price at expiration

  7. = ($900) 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 165 P = $6BE = $159AT P = $150, OPTIONS BUY PUT Profit(in dollars) MAXIMUM PROFIT = $1599 MAXIMUM LOSS = $600 Stock price at expiration

  8. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 160,165 170 OPTIONS BUY PUT: DIFFERENT EXERCISE PRICES A lower strike price results in smaller gains on the downside but smaller losses on the upside Profit(in dollars) 160 165 170 Stock price at expiration

  9. = ($900) 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 165 P = $6BE = $159AT P = $150, OPTIONS SELL PUT Profit(in dollars) MAXIMUM PROFIT = $600 MAXIMUM LOSS = $15,900 Stock price at expiration

  10. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 160,165,170 OPTIONS SELL PUT: DIFFERENT EXERCISE PRICES Profit(in dollars) 170 165 160 Stock price at expiration

  11. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 165 C= $5.75 S = $164BE = $158.25 OPTIONS COVERED CALL Profit(in dollars) (BUY STOCK) MAXIMUM PROFIT = $675 MAXIMUM LOSS = $15,825 Stock price at expiration

  12. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 160,165,170 OPTIONS COVERED CALL: DIFFERENT EXERCISE PRICES Profit(in dollars) 170 165 160 A lower strike price offers the most downside protection but at the expense of more of the upside gain Stock price at expiration

  13. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 165; P =$6; S = $164 OPTIONS PROTECTIVE PUT Maximum profit = infinity Profit(in dollars) Breakeven = $170 Maximum Loss = $500 Stock price at expiration

  14. 2500 2000 1500 1000 500 0 -500 -1000 -1500 -2000 140 150 160 170 180 190 DEC JULY 165, 165, 170 OPTIONS PROTECTIVE PUT; DIFFERENT EXERCISE PRICES A higher strike price offers the most downside protection but at the expense of more of the upside gain Profit(in dollars) 170 165 160 Stock price at expiration

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