股票与投资分析Chap015.docx

Chapter15-OptionsMarkets

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Chapter15

OptionsMarkets

Optionsprovidenumerousopportunitiestomodifytheriskprofileofaportfolio.Thesimplestexampleofanoptionstrategythatincreasesriskisinvestinginan‘alloptions’portfolioofat-the-moneyoptions(asillustratedinthetext).Theleverageprovidedbyoptionsmakesthisstrategyveryriskyandpotentiallyveryprofitable.Anexampleofarisk-reducingoptionsstrategyisaprotectiveputstrategy.Here,theinvestorbuysaputonanexistingstockorportfolio,withexercisepriceoftheputnearorsomewhatlessthanthemarketvalueoftheunderlyingasset.Thisstrategyprotectsthevalueoftheportfoliobecausetheminimumvalueofthestock-plus-putstrategyistheexercisepriceoftheput.

Optionsatthemoneyhavethehighesttimepremiumandthusthehighestpotentialforgain.Sincethehighestpotentialgainisatthemoney,thelogicalconclusionisthattheywillhavethehighestvolume.Acommonphraseusedbytradersis“avoidthecheapsandthedeeps.”Cheapoptionsarethosewithverylittletimepremium.Deepoptionsarethosethatarewayoutoforinthemoney.Noneoftheseprovideprofitopportunities.

Eachcontractisfor100shares:$7.25?100=$725

Ifthestockpricedropstozero,youwillmake$160–$2.62perstock,or$157.38.Given100unitspercontract,thetotalpotentialprofitis$15,738.

Thepricehastobeatleastasmuchasthesumoftheexercisepriceandthepremiumoftheoptiontobreakeven:$40+$4.50=$45.50

Maximumlosshappenswhenthestockpriceisthesametothestrikepriceuponexpiration.Boththecallandtheputexpireworthless,andthei