bull, bear, butterfly, box, collar

covered call = buy asset, sell call

protective put = buy asset, buy put

bull call spread = buy call with low exercise price, sell call with high exercise price

bull put spread = buy put with high exercise price, sell put with low exercise price

bear call spread = sell call with low exercise price, buy call with high exercise price

bear put spread = sell put with high exercise price, buy put with low exercise price

butterfly call spread = buy calls with low and high X, sell 2 calls with middle X

butterfly put spread = buy put with low and high X, sell 2 puts with middle X

straddle long = buy call and put with same X and T

straddle short = sell call and put with same X and T

box = buy call, put and sell call and put with different X

collar = cov . call + prot. put

can anyone confirm I these formulas are correct. Also why do we earn the risk free rate with the box spread?

Do I get a cookie too if I explain how I’d use them?

1BSM is right though, you need to know how to apply each strategy. That’s almost as important as knowing the details of how they’re constructred.

In regards to your box spread question: You’re earning a guarnteed return, there is no risk to the box spread, so your return must equal the risk free rate. Perhaps you’re definition leaves you a bit shakey here. I’d define the box as:

Long bull call spread + long bear put spread.

So buy a call and sell a put at price P and sell a call and buy a put at price Q, where P < Q. Model that out and you’ll see how it works.

geo on fiiiiiiiiiiiiiiiiiiiiiiiiire

everything you guys have said so far is correct, except with some of ‘thespacebar’ definitions. i think your bull put spread and bear put spreads are wrong. check it well. its the other way round.

also i agree with geo well. its about its applicability and how to determine which stra is best fit for which situation.

also i think getting familiar with their graphs is soo soo key in order to know how their payoffs and upside and downside features look like.

you should also know about the expressions for their max profit, lossand break even price of the underlying for the vignette.

hope it helps bro!