Options related questions...

CFA Level III
#1

Hello,

I’m pretty good with options strategies, and being able to calculate the gains/losses, max-loss, max-gain, and breakevens intuitively.

I was wondering if I actually need to know the proper notation that is used in the books for the actual exam?

Also, one thing I’m not good at is understanding the different payoff graphs for the different strategies. Would it suffice to just memorize how each one is drawn?

Thanks in advance

#2

If you know the payoffs then you should know the max(0, S-X), that’s the only notation for option strategies.

Knowing what the downside/upside potential of each strategy, you can draw the zigzags intuitively as well.