CFAI V5, Reading 42, Page 472 - Question 1B You’re asked to calculate value and profit at expiration of a bull spread. I get the value fine, but when I use Schweser’s formula I get an incorrect answer for profit. Any help here? Schweser’s profit formula is = max(0,XH-ST)-max(0,XL-ST)-PH0+PL0 When I use this formula for Question 1Bi, I get -$8 as profit.
Nevermind… I’m an idiot.
I never try to remember the formula, but the graph if you understand the meaning of them it is quite straight forward
Good for you.
Can anyone post an attachment of pictures/graphs showing all the possible option formulae we need to know e.g. money spreads, vanilla options. Vt Profit Max profit Max loss Breakeven point Thanks!
^ I’m working on that - was planning to do that anyway Work in progress: http://www.analystwiki.com/wiki/index.php/Risk_Management_Applications_of_Option_Strategies,_by_Don_M._Chance,_CFA