Does anyone have any notes on option spread pay offs that you can share? I can’t get my head around them and can’t seem to memorize them. Please help!
which ones are you having difficulty with? can you picture payoffs of individual call or put?
Yes, but I cant seem to do the others. Everytime I think I’ve figured it out, but when I look at it again later I’ve forgotten it.
Check out this thread from earlier today. http://www.analystforum.com/phorums/read.php?13,1144807 My opinion: it is harder to memorize the pay off equations than to just think logically through a given problem.
Make notecards and memorize them - that’s what I’m doing, and I’d bet a lot of other people are as well. Not sure there’s a real intuitive way to remember them based on name. First one in my pile of cards is “Butterfly Spread”: “Buy high and low strike calls, sell 2 at the money calls. Max gain if no movement and is (2 ATM calls) - (price paid for high and low calls). Max loss is if underlying moves outside either the high or the low call strike.” Do that for all of them and you’re set, I believe.