Life Guide to Option Strategies - NYSE

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Strategies for Option Trading - Strategies explained with risk profiles
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  LIFFE Options a guide totrading strategies   © LIFFE 2002All proprietary rights and interest in this publication shall be vested in LIFFE Administration and Management ( LIFFE ) and all otherrights including, but without limitation, patent, registered design, copyright, trademark, service mark, connected with this publicationshall also be vested in LIFFE. LIFFE CONNECT™ is a trademark of LIFFE Administration and Management.No part of this publication may be redistributed or reproduced in any form or by any means or used to make any derivative work (suchas translation, transformation, or adaptation) without written permission from LIFFE. LIFFE reserves the right to revise this publicationand to make changes in content from time to time without obligation on the part of LIFFE to provide notification of such revision orchange.Whilst all reasonable care has been taken to ensure that the information contained in this publication is accurate and not misleading atthe time of publication, LIFFE shall not be liable (except to the extent required by law) for the use of the information contained hereinhowever arising in any circumstances connected with actual trading or otherwise. Neither LIFFE, nor its servants nor agents, isresponsible for any errors or omissions contained in this publication. This publication is for information only and does not constitutean offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. All information,descriptions, examples and calculations contained in this publication are for guidance purposes only, and should not be treated asdefinitive. LIFFE reserves the right to alter any of its rules or contract specifications, and such an event may affect the validity of theinformation in this publication.Those wishing either to trade LIFFE futures and options contracts or to offer and sell them to others should establish the regulatoryposition in the relevant jurisdiction before doing so.FLEX  ®  is a registered trademark of the Chicago Board Options Exchange Inc and has been licensed for use by LIFFE. FTSE and Footsie are trademarks of the London Stock Exchange Limited and The Financial Times Limited and are used by FTSEInternational Limited under licence. € Stars is a trademark of FTSE International Limited. Eurotop is a trademark of Euronext NV orits subsidiaries ( Euronext ) and is used by FTSE International Limited under licence.The FTSE Eurotop 100 Index is the proprietary interest of Euronext and FTSE International Limited. All copyright in the index values andconstituent lists vests in Euronext and FTSE International Limited jointly. The FTSE 100 Index, the FTSE 250 Index, the FTSE Eurotop300 Index, the FTSE Eurotop 300 (Ex UK) Index, the FTSE Euro 100 Index and the FTSE € Stars Index are the proprietary interest ofFTSE International Limited and have been licensed for use by LIFFE. All copyrights in the index values and constituent lists vest in FTSEInternational Limited. Euronext and FTSE International Limited in no way sponsor, endorse or are otherwise involved in the issue andoffering of LIFFE products and do not accept any liability in connection with the trading of LIFFE products.The MSCI Euro Index and MSCI Pan-Euro Index (the Indices ) are service marks of Morgan Stanley Capital International Inc. ( MSCI ).The service marks have been licensed by MSCI for use by LIFFE. No Exchange Contract on the MSCI Euro Index and MSCI Pan-EuroIndex is sponsored, guaranteed or endorsed by MSCI. MSCI makes no representations regarding the advisability of using suchExchange Contracts. MSCI does not make any representation as to the accuracy or completeness of the Indices or any part of theirconstituent data. MSCI gives no warranty as to purpose or as to any use to which the Indices or Exchange Contracts thereon may beput or as to the validity or otherwise of information published by the Exchange in connection with any aspect of contracts entered intoin the terms of such an Exchange Contract. Without limiting any of the foregoing, in no circumstance shall MSCI have any liability fordirect, indirect, special or consequential damages, including any loss of profit.Swapnote  ®  is a registered trademark of ICAP plc and has been licensed for use by LIFFE. The Swapnote  ®  contract design and algorithmare protected by patent (US 6,304,858 B1), owned by Adams, Viner and Mosler Ltd. (“AVM”) and is exclusively licensed to LIFFEworldwide.  Contents PageIntroduction LIFFE options contracts3Recognised strategies5Basic options theory7Notes on strategy construction10 LIFFE Options Strategies 1.Long Call 112.Short Call123.Long Put 134.Short Put145.Long Call Spread156.Short Put Spread167.Short Call Spread178 Long Put Spread189.Long Combo1910.Short Combo2011.Long Straddle2112.Short Straddle2213.Long Strangle2314.Short Strangle2415.Long Guts 2516.Short Guts2617.Long Butterfly2718.Short Butterfly2819.Long Condor2920.Short Condor3021.Long Iron Butterfly3122.Short Iron Butterfly3223.Long Iron Condor33 1  2 24.Short Iron Condor3425.Long Call Strip3526.Short Call Strip3627.Long Put Strip3728.Short Put Strip3829.Long Calendar Spread3930.Long Diagonal Calendar Spread4031.Long Straddle Calendar Spread4132.Long Diagonal Straddle Calendar Spread4233. Long Jelly Roll4334. Long Straddle (Calendar) Strip4435.Long Box4536.Long Two by One Ratio Call Spread4637.Short Two by One Ratio Call Spread4738.Long Two by One Ratio Put Spread4839.Short Two by One Ratio Put Spread4940.Long Call Ladder5041.Short Call Ladder5142.Long Put Ladder5243.Short Put Ladder5344. Synthetic Long Underlying5445. Synthetic Short Underlying5546. Long Call Spread versus Put5647. Short Call Spread versus Put5748. Long Put Spread versus Call5849. Short Put Spread versus Call5950. Long Straddle versus Call6051. Short Straddle versus Call6152. Long Straddle versus Put6253. Short Straddle versus Put6354.Long Volatility Trade6455.Short Volatility Trade6556.Conversion/Reversal6657.Delta Neutral Strategies67 Page
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