Options Flashcards
What is not a fixed option contract
The premium in a stock option
Continuously changes throughout the life of the option
What is a fixed option contract
Multiplier in an index option
Units of currency in currency option
Expiration month in debt option
Short straddle writer
Always looking for a stable market
What protects a short call?
A long option with same or lower stoke price and same or longer expiration
Bill call spread
The investor
Buys lower exercise price
Sells higher exercise price
Anticipates the spread to widen
Customer believes market price stock will sharply rise or fall in near future
What’s best strategy
Buy a straddle
Long call spread break even
Strike price + debit
Ex 40 strike price -debit
Reg t sets the initial margin requirement to buy LEAP options with over 9 months
75% of purchase amount
Once a Leap has 9 months or less to expiration, the margin increase to
100%
