Bear, Bulls, Butterflies, Boxes, Collars and....

CFA Level III
#21

I would not recommend remembering any formulas… simply know how to construct the graphs. From there, you will know how to calculate the total net profit on a spread position by looking at each option’s payoff. Be always careful when your options are in- or out-of-the-money…

#22

i posted something here…see if it makes sense. http://www.analystforum.com/phorums/read.php?13,1158292,page=2

#23

I dont know if this will help you but i always remember the diff between bull and bear as BULLS Because Ur Long the Lower Strike

#24

I spent half a day drawing charts and formulae, and testing myself by going thru the questions in that CFAI curriculum chapter. It really did help clear some things up! CFAI doesn’t cover all longs and shorts of the strategies, so use this to supplement if you need to double check the formulae. http://www.theoptionsguide.com

#25

Another good post.

#26

when is the maximum loss from a strategy anything OTHER THAN the net premium outlay @ start? i think the whole point of these is that the maximum loss will never be more than the initial cash outlay. Which is why the cash outlay is worth it…