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Option Strategy Formulae - Approach

Trying to have a consistent & intuitive approach to deriving or getting to the formulae used to calculate maximum gain, maximum loss, breakeven, expiration value & profit at expiration for the covered calls, protective puts, bull spreads, bear spreads, long straddles and short straddles.

So far, I have a understanding of the: 

  • Options and underlying assets required to for each these strategies
  • The payoff diagrams for each of these strategies.

What I am battling with is having a consistent & intuitive approach of determining the maximum gain, maximum loss, breakeven, expiration value & profit at expiration.

I have looked at various posts online but none of them provide sufficient detail. Your assistance will be appreciated.

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I wrote a series of articles on option strategies that have been well-received.

I just added the summary option strategy article and the article on bear spreads to the list of sample articles so that candidates can get an idea of what they’re like.

(Full disclosure: as of 4/25/16, there is a charge to read the articles on my website.  You can get an idea of the quality of the articles by looking at the free samples here: http://www.financialexamhelp123.com/sample-articles/.)

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

Hi S2000magician, unfortunately yours costs are prohibitive and the sample “Bear Spread” article is limited to your members.

Anyone else who can help?

iWill wrote:
Hi S2000magician, unfortunately yours costs are prohibitive and the sample “Bear Spread” article is limited to your members.

Something’s wonky with the site at the moment; it’s marked as Free, but it’s not showing up as free.

Sorry about that.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/