Shared Flashcard Set

Details

Title

Options Hedging (Spreads)

Description

How to deal with Spreads

Total Cards

Subject

Finance

Level

Professional

Created

10/23/2012

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Additional Finance Flashcards

Term

Credit Spread

Max Gain:

Max Loss

Profitable if

Definition

Credit Spread

Max Gain: net credit

Max Loss: Exercise Price difference-net credit

Profitable if:Difference in premium narrows and options expire

Term

Credit Call Spread (Writer)

Break Even

Max Loss

Max Gain

Definition

BE: CALS (Calls Add to Low Strike Price) (Adding Net premium)

Max Gain: Net Premium

Max Loss: Difference between XPs=Max Loss+Max Gain

Term

Wrote a PUT Spread, Credit

BE: PUT SUB from HIgh

Profit, above BE

Max Gain: net premium

Max Loss: Difference in strike prices minus net prmium

Definition