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A protective option constructed with a put to cover shares of stock that an investor owns is called a protective put or married put, [1] [2] while one constructed with a call to cover shorted stock is a protective call or married call. [3] In equilibrium, a protective put will have the same net payoff as merely buying a call option, and a ...
These strategies may provide downside protection as well. Writing out-of-the-money covered calls is a good example of such a strategy. The purchaser of the covered call is paying a premium for the option to purchase, at the strike price (rather than the market price), the assets you already own.
A long butterfly options strategy consists of the following options: Long 1 call with a strike price of (X − a) Short 2 calls with a strike price of X; Long 1 call with a strike price of (X + a) where X = the spot price (i.e. current market price of underlying) and a > 0. Using put–call parity a long butterfly can also be created as follows:
A covered call is a basic options strategy that involves selling a call option (or “going short” as the pros call it) for every 100 shares of the underlying stock that you own. It’s a ...
The fuzzy pay-off method for real option valuation (FPOM or pay-off method) [1] is a method for valuing real options, developed by Mikael Collan, Robert Fullér, and József Mezei; and published in 2009. It is based on the use of fuzzy logic and fuzzy numbers for the creation of the possible pay-off distribution of a project (real
A condor is a limited-risk, non-directional options trading strategy consisting of four options at four different strike prices. [1] [2] The buyer of a condor earns a profit if the underlying is between or near the inner two strikes at expiry, but has a limited loss if the underlying is near or outside the outer two strikes at expiry. [2]
Debt snowball method: What it is and how it works. With the debt snowball method, you order your debts by size of outstanding balance and make minimum payments, putting any extra money in your ...
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