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The option strategy where the middle options (the body) have different strike prices is known as a Condor. A Christmas tree butterfly (not to be confused with the unrelated option combination also called a Christmas tree ) consists of six options used to create a payoff diagram similar to a butterfly but slightly bearish or bullish instead of ...
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]
The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
The trader paid $2 for the option and so breaks even at a stock price of $22 (the stock price plus the option’s cost). So the option may be in the money at expiration, but the trader may still ...
An Asian option (or average value option) is a special type of option contract. For Asian options, the payoff is determined by the average underlying price over some pre-set period of time. For Asian options, the payoff is determined by the average underlying price over some pre-set period of time.
The subtraction done one way corresponds to a long-box spread; done the other way it yields a short box-spread. The pay-off for the long box-spread will be the difference between the two strike prices, and the profit will be the amount by which the discounted payoff exceeds the net premium. For parity, the profit should be zero.
A Canary option is an option whose exercise style lies somewhere between European options and Bermudian options. (The name refers to the relative geography of the Canary Islands .) Typically, the holder can exercise the option at quarterly dates, but not before a set time period (typically one year) has elapsed.
An option payoff diagram for a long straddle position. A long straddle involves "going long volatility", in other words purchasing both a call option and a put option on some stock, interest rate, index or other underlying. The two options are bought at the same strike price and expire at the same time. The owner of a long straddle makes a ...