Although I dont have a memorisation strategy set in stone yet with respect to the option strategies, I think I would go about it this way:
1.There are strategies that i will commit to memory completely in terms of Value,Profit,Max P,Max L, Break points
For me these are Covered Call,Protective Put , Collar and Box Spread.
2.The rest of the option strategies in terms of Value,Profit,Max P, Max L,BPs can be sorta derived from the payoff/profit diagramms and/or certain rules , that to me , are easier to memorise than the actual formulas.
Value=trivial from definition
Profit=trivial (Value-Costs of options)
Max Profit=First look at payoff diagramm, if upside is infinite then stop, we found the answer.If upside is not infinite then max profit=coresponding strike prices + cost of options. (exception being butterfly spread)
Max Loss=Cost of options with reversed signs
Breakeven=specific combinations of strike prices and max Loss.
3.Example : Bull Spread (long call x1+short call x2)
Max Profit=coresponding strike prices and costs. coresponding strikes can be read directly from equation 1,just look at sign before strike prices in first equation (-X1) and -(-X2). This gives X2-X1. Now combine with costs,we yield [X2-X1-c1+c2]
- Max Loss=costs with reversed signs=c1-c2
- BreakEven=X1+max loss=X1+c1-c2
…So perhaps i just need to remember 4 strategies completely, and the other 4 i could derive with two pieces of info:
- Definition of strategy
- Break even points in terms of Max Loss
Still need to test this out though