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Sigma Capital - Financial Intelligence 101 - Options Lesson
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Click-1   |    Click-2
Bullish
Bearish
Volatile
Flat1  |  Flat 2
Buy Instrument
Stock / Futures Index, Forex,
Commodity etc
Short Sell Instrument
Stock / Futures Index, Forex,
Commodity, etc
Delta Neutral
Butterfly Call
Butterfly Put
Buy Call
Buy Put
For Gapping Market
DB Straddle =
Buy Call + Put ATM
Iron Condor
CR Call Spread +
CR Put Spread
Buy DB Bull Call Spread
Buy DB Bear Put Spread
For Gapping Market
DB Strangle =
Buy Call + Put OTM
CR Strangle
Sell CR Put (Naked)
Sell CR Call (Naked)
  CR Straddle
Sell CR Bull Put Spread
Sell CR Bear Call Spread
Call Back Spread
Call Ratio Spread
Covered Call
Covered Put
Put Back Spread
Put  Ratio Spread
Buy Stock +
Protective Buy Put
Sell Stock +
Protective Buy Call
  Horizontal Spread or
Calendar Spread
Diagonal Spread
    Diagonal Spread
Call Back Spread
Put Back Spread
  Sell CR Call (Naked)
Ratio Put Spread
Ratio Call Spread
  Sell CR Put (Naked)
Collar (see Flat strategy)
Collar (see Flat Strategy)
Collar (see Flat Strategy)
Collar
      Covered Call
      Covered Put
      Sell CR Bull   Put Spread
      Sell CR Bear Call Spread
80% T-Bonds + 10% MM
80% T-Bonds + 10% MM
80% T-Bonds + 10% MM
80% T-Bonds + 10% MM
 
  Options
  Description
  Buy Call
  Right to Buy - at Strike Price
e.g strike 30 @ 1$ (cost premi)
& "Not Obligation" to Buy

Hak mem-Beli - diharga tertentu   
ex. strike 30 @ 1$ (cost premi)
& Bukan Kewajiban mem-Beli
       
  Risk
  Only     (1)$ cost / premium
Hanya  (1)$ cost / premi
  Reward
  Unlimited Profit Above  BEP [31]
Unlimited Profit di Atas BEP [31]
  BEP
  Strike + Premi = 30 + 1 = 31
   
  Options
  Description
  Sell Call
  Obligation to Sell - at Strike Price
e.g Strike 30 @ 1$ (receive credit premi)


Kewajiban men-Jual - diharga tertentu   
ex. Strike 30 @ 1$ (terima credit premi)
       
  Risk
  Unlimited Loss Above   BEP [31]
Unlimited Loss di Atas  BEP [31]
  Reward
  Limited to premium received   = +1$
Terbatas pada premi diterima = +1$
  BEP
  Strike + Premi = 30 + 1 = 31
       
  Options
  Description
  Buy Put
  Right to Sell - at Strike Price e.g @30
& No Obligation to Sell

Hak Jual diharga tertentu   ex. @30
& Bukan Kewajiban men-Jual
       
  Risk
  Only     1$ cost / premium
Hanya 1$ cost / premi
  Reward
  Max Profit 29 Below       BEP [29] to  0
Max Profit 29 di Bawah  BEP [29] s/d 0
  BEP
  Strike - Premi = 30 - 1 = 29
   
  Options
  Description
  Sell Put
  Obligation to Buy - at Strike Price
e.g Strike 30 @ +1$ (receive credit)

Kewajiban Beli diharga tertentu   
ex. Strike 30 @ +1$ (terima credit)
       
  Risk
  Max Loss 29 Below  BEP [29] to  0
Max Loss di Bawah  BEP [29] s/d 0
  Reward
  Limited to premium received   = +1$
Terbatas pada premi diterima = +1$
  BEP
  Strike - Premi = 30 - 1 = 29
 
Bullish Strategy
   
Buy Instruments
Buy Stock / Futures (Index - Forex - Commodity - etc)
Market is Up-Trending, Bullish view
We want to enter the market with bracket order (Buy + Limit profit =5 & Stop Loss = -1)

  • Buy Stock/ETF QQQQ = $30, Total $3.000. Limit profit 5 = 35, Stop Loss 1 = 29

  • When Stock is Up,       We automatically exit profit +5 at 35
  • When Stock is Down,  We automatically exit loss   (1) at 29
 
Scenario 1
Q is Up from 30 to 40. it’s up 10.  Note: We auto exit at 35
  • We bought Q for 30, our ROI is 5 / 30 = 16%.
  • We exit automatically at 35, and automatically cancel the stop loss.
 
Scenario 2
Q is Down from 30 to 20. it’s down 10.  Note: We auto exit at 29
  • We bought Q for 30, and Sold at 29 (not 20) our loss is 1 / 30 = (3%). not (30%)
 
The more the stock Q goes Down = we are save. we exited at 29
The more the stock Q goes    Up   = Our profit is still 5
 
Initial Stock 30
.
Stock = 40
Auto Limit Profit
Stock = 35
.
Stock = 30
.
Stock = 20
Auto Stop Loss
Stock = 29
Buy Instrument
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
                       
Buy Stock@
(30)
+40
+10
+35
+5
+30
0
+20
(10)
+29
(1)
  (30)
+40
+10
+35
+5
+30
0
+20
(10)
+29
(1)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L ->
  +$1.000
  +$500
  0
  ($1000)
  ($100)
ROI
P/DB->
  +30%
  +16%
  BEP
       
 
Bullish Strategy
   
Buy Instruments
  • Buy Stock / Futures (Index - Forex - Commodity - etc)
Buy Instrument – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬▬▬o▬
Risky
Profit
Limited
▬▬▬o▬
Unlimited
Time Decay
Friendly
▬▬o▬▬
Enemy
 
 
 
Bullish Strategy
   
Buy Call Options
  • Buy Call = Right to Buy at Strike Price (Hak Beli diharga Tertentu)
  • Not Obligation to Buy (Bukan Kewajiban Beli Saham diharga tertentu)
Market is Up-Trending, Bullish view
We want to enter the market with small capital but expecting high profit.

  • If we buy the stock / ETF QQQQ at $30, we have to spend $3.000  for 100 shares & we don’t want to spend that
    much. Instead,

  • we Buy Call Options on QQQQ strike 30 for $1 only for a total $100 per contract.
    1 contract = 100 shares. (Right to Buy stock at price 30$, but Not Obligation to Buy at 30)
 
Scenario 1
Q is Up from 30 to 40. it’s up 10.  Note: Our BEP is 31
We bought Q Call options for only 1, our ROI is (10 profit – 1 cost) / 1 = 900%.
We have the Right to Buy Stock at strike 30$, with the cost of 1$
Kita punya Hak Beli Saham di harga 30$, dengan Biaya 1$

Jika Harga Saham < 30, kita tidak wajib beli saham di harga 30$, & hilang biaya hanya 1$
If we buy Stock ETF Q, our ROI is 10/30 = 33% only.
 
Scenario 2
Q is Down from 30 to 20
We bought Q Call options for only 1, hence our loss is also only $1. (total $100). We have $2.900 left, for 29 more
entries, more money
If we bought the stock ETF Q like average investor, our loss is10 x 100s = (1.000).  We have $2.000 left, no more entry,
no enough money
The more the stock Q goes Down = Bigger loss Stock Q [Options only loss $1].
The more the stock Q goes    Up   = Bigger ROI Profit for Options
 
Initial Stock 30
Expiry Day
Stock = 40
Expiry Day
Stock = 36
Expiry Day
Stock = 31
Expiry Day
Stock = 30
Expiry Day
Stock = 20
Buy DB Call
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
                       
Buy C 30 @
_(1.0)_
+10
+9
+6
+5
+1
0
0
(1)
0
(1)
  (1.0)
+10
+9
+6
+5
+1
0
0
(1)
0
(1)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L ->
  +$900
  +$500
  0
  ($100)
  ($100)
ROI
P/DB->
  +900%
  +500%
  BEP
       
 
Bullish Strategy
   
Buy Call Options
  • Unlimited Profit if stock > 31
  • Limited loss                  = (0.5)
Buy Call – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬▬▬o▬
Unlimited
Time Decay
Friendly
▬▬▬o▬
Enemy
 
 
 
Bullish Strategy
   
Buy DB Bull Call Spread
  • Buy Lower Strike Call   - Near The Money or ATM (near stock price)
  • Sell Higher Strike Call  - OTM (Further UP from stock Price)
Market is Uptrending, Bullish view. Stock is at 30

  • Sell Call Options Strike 32 @    +0.5
  • Buy Call Options Strike 30 @      (1)       -> Total DB = (0.5) i.e Cheaper than Buy single Call
  • Max Loss  = DB   = (0.5)
  • Max Profit = Size = +2
  • Net profit  = Size - DB = 2 - 0.5 = +1.5
  • ROI = Profit/DB = 1.5/0.5 = 300%
 
Initial Stock 30
Expiry Day
Stock = 32
Expiry Day
Stock = 36
Expiry Day
Stock = 30.5
Expiry Day
Stock = 30
Expiry Day
Stock = 20
DB Bull Call Spread
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Sell C 32 @
+0.5
0
+0.5
(4)
(3.5)
0
+0.5
0
+0.5
0
+0.5
Buy C 30 @
_(1.0)_
+2
+1.0
+6
+5.0
+0.5
(0.5)
0
(1.0)
0
(1.0)
  (0.5)
+2
+1.5
+2
+1.5
+1
0
0
(0.5)
0
(0.5)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L ->
  +$150
  +$150
  0
  ($50)
  ($50)
ROI
P/DB->
  +300%
  +300%
  BEP
       
 
Bullish Strategy
   
Buy DB Bull Call Spread
  • Limited Profit = +1.5
  • Limited Loss   =  (0.5)
Buy DB Bull Call Spread – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬▬o▬▬
Enemy
 
 
 
Bullish Strategy
/ Flat
 
Sell CR Put (Naked)
  • Sell Lower Strike Put  - OTM (Further DOWN from stock Price)
Market is Up-Trending, Bullish view. Stock is at 30.

  • Sell Put Options Strike 24 @    +0.5
  •                           -> Total CR = +0.5 i.e Max Profit
  • Max Loss  = (24). Optional Setting Stop Loss Put Options (1) at a total of (1.5)
  • Max Profit = Premium = +0.5
  • Net profit  = Premium = +0.5
  • ROI = Profit/Deposit   = Variable
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock >= 24
Expiry Day
Stock = 23.5
Expiry Day
Stock = 20
 
Sell CR Put (Naked)
price now
P/L
price now
P/L
price now
P/L
price now
P/L
   
                       
Sell P 24 @
_+0.5_
0
+0.5
0
+0.5
(0.5)
0
(4)
(3.5)
   
  +0.5
0
+0.5
0
+0.5
(0.5)
0
(4)
(3.5)
   
Total
CR
Lmt DB
Net P/L
Lmt DB
Net P/L
Lmt CR
Net P/L
Lmt DB
Net P/L
   
Total
P/L ->
  +$50
  +$50
  0
  ($350)
   
ROI
P/DB->
  +$50
  +$50
  BEP
       
 
Bullish Strategy
/ Flat
 
Sell CR Put (Naked)
  • Limited Profit = +0.5
  • Max Loss from (Strike-CR) 23.5 to Zero (or use Stop Loss)
Sell CR Put – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬▬▬o▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
/ Flat
 
Sell CR Bull Put Spread
  • Sell Higher Strike Put - Near The Money or ATM (near stock price)
  • Buy Lower Strike Put - OTM (Further DOWN from stock Price)
Market is Uptrending, Bullish view. Stock is at 30

  • Sell Put Options Strike 30 @       +2
  • Buy Put Options Strike 28 @     (0.5)                 -> Total CR = +1.5 i.e Limited Max Profit
  • Max Loss  = Size   = (2)
  • Max Profit = CR     = +1.5
  • Net Loss   = Size - CR = 2 - 1.5  = (0.5)  -> Total DB = (0.5) i.e Limited loss & Deposit
  • ROI = Profit/DB = 1.5/0.5 = 300%
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock = 36
Expiry Day
Stock = 28.5
Expiry Day
Stock = 28
Expiry Day
Stock = 20
CR Bull Put Spread
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Sell P 30 @
+2.0
0
+2.0
0
+2.0
(1.5)
+0.5
(2)
0.0
(10)
(8.0)
Buy P 28 @
_(0.5)_
0
(0.5)
0
(0.5)
0
(0.5)
0
(0.5)
+8
+7.5
  +1.5
0
+1.5
0
+1.5
(1.5)
0
(2)
(0.5)
(2)
(0.5)
Total
CR
Lmt DB
Net P/L
Lmt DB
Net P/L
Lmt DB
Net P/L
Lmt DB
Net P/L
Lmt DB
Net P/L
Total
P/L ->
  +$150
  +$150
  0
  ($50)
  ($50)
ROI
P/DB->
  +300%
  +300%
  BEP
       
 
Bullish Strategy
/ Flat
 
Sell CR Bull Put Spread
  • Limited Profit from CR                       = +1.5
  • Limited Loss from (Size - CR) 2-1.5 = (0.5)
Sell CR Bull Put Spread – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬▬o▬▬
Enemy
 
 
 
Bullish Strategy
/ Flat
 
Buy ATM DB Covered Call Spread
  • Buy Stock   - at current market price
  • Sell Call      - ATM (More Time Value) -> For Beginner
Market is Uptrending, Slightly Bullish or Flat view. Stock is at 30

  • Sell Call Options Strike 30 @     +2
  • Buy Stock                           @    (30)       -> Total DB = (28) i.e Cheaper than Buy stock only
  • Max Loss  = DB   = (28)
  • Max Profit = (till Call Strike 30 + TV) - DB = 30 - 28 = + 2
  • Net profit  = (till Call Strike 30 + TV) - DB = 30 - 28 = + 2
  • ROI = Profit/DB = 2/28 = 7% in one month
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock = 36
Expiry Day
Stock = 28
Expiry Day
Stock = 27
Expiry Day
Stock = 20
DB ATM Cov Call Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Sell C 30 @
+2
0
+2
(6)
(4)
0
+2
0
+2
0
+2
Buy Stock@
(30)
+30
0
+36
+6
28
(2)
27
(3)
20
(8)
  (28)
+30
+2
+30
+2
28
0
27
(1)
20
(6)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L ->
  +$200
  +$200
  0
  ($100)
  ($600)
ROI
P/DB->
  +7%
  +7 %
  BEP
       
 
Bullish Strategy
/ Flat
 
Buy ATM DB Covered Call Spread
  • Limited Profit =  TV   = +2
  • Max Loss = Total DB  = 28
Buy ATM DB Covered Call Spread – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬▬▬o▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
/ Flat
 
Buy DB OTM Covered Call Spread
  • Buy Stock   - at current market price
  • Sell Call      - OTM (Less Time Value) -> For Intermediate Investor
Market is Uptrending, Bullish or Flat view. Stock is at 30

  • Sell Call Options Strike 35 @     +1
  • Buy Stock                           @    (30)       -> Total DB = (29) i.e Cheaper than Buy stock only
  • Max Loss  = DB   = (29)
  • Max Profit = (till Call Strike 35 + TV) - DB = 35 - 29 = + 6
  • Net profit  = (till Call Strike 35 + TV) - DB = 35 - 29 = + 6
  • ROI = Profit/DB = 2/28 = 7% in one month
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock = 36
Expiry Day
Stock = 29
Expiry Day
Stock = 28
Expiry Day
Stock = 23
DB OTM Cov Call Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Sell C 35 @
+1
0
+1
(1)
(0)
0
+1
0
+1
0
+1
Buy Stock@
(30)
+30
0
+36
+6
29
(1)
28
(2)
23
(7)
  (29)
+30
+1
+35
+6
29
0
28
(1)
23
(6)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L ->
  +$100
  +$600
  0
  ($100)
  ($600)
ROI
P/DB->
  +3.5 %
  +20 %
  BEP
       
 
Bullish Strategy
/ Flat
 
Buy DB OTM Covered Call Spread
  • Limited Profit =  [Strike - DB]   = 35 - 29 = +6
  • Max Loss = Total DB  = 29
Buy OTM DB Covered Call Spread – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬▬▬o▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
/ Flat
 
Buy DB ITM Covered Call Spread
  • Buy Stock   - at current market price
  • Sell Call      - ITM (Less Time Value) -> For Beginner & Intermediate
Market is Uptrending, Slightly Bullish or Flat view. Stock is at 30. Objective is to earn Options Time Value or Raising stock
price

  • Sell Call Options Strike 20 @    +5.5
  • Buy Stock                           @    (30)       -> Total DB = (24.5) i.e Cheaper than Buy stock only
  • Max Loss  = DB          =  (24.5)
  • Max Profit = (till Call Strike 25 + TV) - DB = 25 - 24.5 = + 0.5
  • Net profit  = (till Call Strike 30 + TV) - DB = 25 - 24.5 = + 0.5
  • ROI = Profit/DB = 0.5/24.5 = 2% in one month
 
Initial Stock 30
Expiry Day
Stock = 30
Expiry Day
Stock >= 25
Expiry Day
Stock = 24.5
Expiry Day
Stock = 23.5
Expiry Day
Stock = 20
DB ITM Cov Call Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Sell C 25 @
+5.5
(5)
+0.5
0
+5.5
0
+5.5
0
+5.5
0
+5.5
Buy Stock@
(30)
+30
0
+25
(5)
+24.5
(5.5)
+23.5
(6.5)
+20
(10)
  (24.5)
+25
+0.5
+25
+0.5
+24.5
0
+23.5
(1)
+20
(4.5)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L ->
  +$200
  +$200
  0
  ($100)
  ($450)
ROI
P/DB->
  +7%
  +7 %
  BEP
       
 
Bullish Strategy
/ Flat
 
Buy ITM DB Covered Call Spread
  • Limited Profit =  TV   = +2
  • Max Loss = Total DB  = 28
Buy ITM DB Covered Call Spread – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬▬▬o▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
 
 
Bullish Strategy
/ Flat
 
Buy Stock +
Buy Protective Put
  • Buy Stock   - at current market price
  • Buy Put       - ATM (to protect the stock) -> For Beginner
Market is Up-Trending, Bullish view. Stock is at 30

  • Buy Stock                          @     (30)
  • Buy Put Options Strike 30 @      (1)       -> Total DB = (31) i.e Buy Stock + Insurance
  • Max Loss  = DB   = (31)
  • Max Profit = Unlimited if stock >31
  • Net profit  =
  • ROI = Profit/DB = P/31 = unlimited%
 
Initial Stock 30
Expiry Day
Stock = 40
Expiry Day
Stock = 36
Expiry Day
Stock = 31
Expiry Day
Stock = 27
Expiry Day
Stock = 20
Buy (Stock + Put)
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
Buy Stock@
(30)
40
+10
36
+6
31
+1
27
(3.0)
20
(10)
Buy P 30 @
(1.0)
0
(1)
0
(1)
0
(1)
+3.0
+2.0
+10
+9.0
  (31)
+40
+9
+36
+5
+31
0
30
(1)
30
(1)
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L ->
  +900
  +500
      ($100)
  ($100)
ROI
P/DB->
  +29%
  +16 %
  BEP
       
 
Bullish Strategy
/ Flat
 
Buy Stock +
Buy Protective Put
  • Un-Limited Profit if stock                                 >31 & above
  • Limited Loss = Total Buy DB Put (Insurance) =(1)
Buy Stock + Buy Protective Put – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬▬▬o▬
Unlimited
Time Decay
Friendly
▬▬▬o▬
Enemy
 
 
 
Bullish Strategy
Flat Strategy
 
Ratio Put Spread =
Buy 1 Put ATM & Sell 2 Put OTM
  • Buy 1X ATM Put Options (Near the Stock Current Price)
  • Sell 2X OTM Put Options (Further DOWN from the Stock Current Price)
Market is Up-Trending, Bullish Buy Flat. Objective is to earn Premium from Options and Profit from long options if the
market is down but only a little.

  • Sell 2 X OTM Put  Options Strike 28 @ +2 X 2 = +4
  • Buy 1 X ATM  Put Options Strike 30 @                 (3)    -> Tot CR = +1  
  • Max Loss      = (25) if stock < 25
  • Max Profit  1 = +1                                              ->If stock >30, Profit From Credit = +1
  • Max Profit  2 = +3 If stock = 28
  • BEP              =  25

  • If stock goes Up      > 30,  our total profit is only = +1
  • If stock goes Down  = 28, our total profit is max  = + 3
 
Initial Stock 30
Expiry Day
Stock >= 30
Expiry Day
Stock = 28
Expiry Day
Stock = 25
Expiry Day
Stock = 24
Expiry Day
Stock =20
Ratio Put Spread
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
S 2*P28@2
+4
0
+4
0
+4
(6)
(2)
(8)
(4)
(16)
(12)
B 1*P30@3
(3)
0
(3)
+2
(1)
+5
+2
+6
+3
+10
+7.0
  +1.0
0
+1
+2
+3
(1)
0
(2)
(1)
(6)
(5.0)
Total
CR
Lmt DB
Net P/L
Lmt CR
Net P/L
Lmt DB
Net P/L
Lmt DB
Net P/L
Lmt DB
Net P/L
Total
P/L ->
  +$100
  +$300
  0
  ($100)
  ($500)
ROI
P/DB->
      Max
  BEP
       
 
Bullish Strategy
Flat Strategy
 
Ratio Put Spread =
Buy 1 Put ATM & Sell 2 Put OTM
  • Limited Profit = +3 if stock =32 and Limited Profit = + 1 if stock <30
  • Un-Limited Loss   =  If stock > 34
Ratio Put Spread – Profit & Loss Diagram
Market View
Bearish
▬▬▬o▬
Bullish
Risk
Safe
▬▬▬o▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬▬o▬▬
Enemy
 
 
 
Bullish Strategy
Flat Strategy
   
DB Calendar CALL Spread
Buy 1 ATM Call - Long  
Term
Sell 1 ATM Call - Short
Term
  • Buy 1X ATM Call Options 30 (Near Current Stock Price - 3 Months)
  • Sell 1X ATM Call Options 30 (Near Current Stock Price - 1 Month)
  • Market is Flat. Stock is 30. Objective is to earn limited profit from Options Time Value.
  • We buy and sell ATM Call Options with different months, to get profit from shorter month Time Value
  • This is to cover the cost of longer term Call Options.

  • Buy 1 X ATM  Mar Call Options Strike 30 @  (3)
  • Sell 1 X ATM  Feb  Call Options Strike 30 @  +2.0       -> Tot DB = (1)

  • Max Loss         =  Db = (1)
  • Max Profit        =  
  • Net Max Profit  =  Variable
  • ROI Max           = Profit / DB = Variable
  • Best Example   = Stock at the End of January is still 30 & Call Options January is expire.
 
Initial Stock 30
Expiry Day Feb
Stock = 30
Expiry Day Feb
Stock = 31
Expiry Day Feb
Stock = 28
Expiry Day Feb
Stock = 20
Expiry Day Feb
Stock = 40
DB Calendar Call Sp
price now
P/L
price now
P/L
price now
P/L
price now
P/L
price now
P/L
B 1*Mar C30
(3)
+2.5
(0.5)
+4
+1
+1
(2)
0
(3)
+12
+9
S 1*Feb C30
+2
0
+2
(1)
+1
0
+2
0
+2
(10)
(8)
  (1)
+2.5
+1.5
+3
+2
+1
0
0
(1.0)
+2
+1
Total
DB
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Lmt CR
Net P/L
Total
P/L
  +$150
  +$200
  0
  ($100)
  +$100
ROI
P/DB
          +/- BEP
  Max Loss
   
 
Bullish Strategy
Flat Strategy
   
DB Calendar CALL Spread
Buy 1 ATM Call - Long  Term
Sell 1 ATM Call - Short Term
  • Limited Profit = +Variable around  < +3
  • Limited Loss   =  DB = (1) if stock < 30 on expiry day
DB Calendar Call Spread – Profit & Loss Diagram
Market View
Bearish
▬▬o▬▬
Bullish
Risk
Safe
▬o▬▬▬
Risky
Profit
Limited
▬o▬▬▬
Unlimited
Time Decay
Friendly
▬o▬▬▬
Enemy
 
“Trading Futures instruments such as Index, Foreign exchange, Commodity, Bonds, or other high leverage instruments on margin carries a high level of risk,
and may not be suitable for all investors
. The high degree of leverage can work against you as well as for you. Before deciding to invest in these high
leverage instruments you should carefully consider your investment objectives, level of experience, and risk appetite.

The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to
lose.
You should be aware of all the trading risks associated with all of these instruments, and seek advice from an independent financial advisor if you
have any doubts.”