Option Spread Strategies Trading Up Down And Sideways Markets 1st Edition Anthony J Saliba ,Joseph C Corona ,Karen E Johnson - Solutions

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How would you use Ms. Stevens’ presence to address the concerns articulated by Patrick’s mother? Would you coach Ms. Stevens in advance of the meeting? If so, what advice would you give Ms. Stevens?
How would you structure the meeting to manage the intensity exhibited by Patrick’s mother in the phone conversation with the department chair? When and how would you introduce the issue of conflict?
What is your goal for the meeting? Give some thought to what needs to happen during the meeting for the discussion to be productive?
How would you handle introductions at the meeting? What casual questions might you pose to break the tension and demonstrate your genuine interest in Patrick’s success at the institution?
Give thought to how you might structure the meeting such that the true issue can be uncovered and addressed in a constructive manner.Does your approach take into account the individual perspectives and expectations of Patrick, his parents, and Ms. Stevens? Does your approach incorporate relevant
What, if any, campus or department policies you would review prior to the meeting with Patrick and his parents?
What might you do to discern the true nature of the issue of disagreement before meeting with Patrick and his parents? What information might you request from Ms. Stevens, the registrar, Patrick’s academic advisor, and other offices on campus?
What, if anything, would you share with Ms. Stevens about the comments made by Patrick’s mother? Is it likely that Ms. Stevens will be agreeable to meeting with Patrick and his parents? How important is it that Ms. Stevens join you in talking with Patrick and his parents?
A conversion consists of a long underlying position, a short call, and a long put. True or false? LO.1
An increase in volatility will have a negative effect on the coveredwrite position since an option with a higher volatility may have a better chance of ending up in-the-money. True or false? LO.1
A short call will always have a positive theta. True or false? LO.1
Will falling implied volatility cause the value of the covered-write to rise or fall? LO.1
A covered-write will always have a positive vega. True or false? LO.1
What is the synthetic equivalent of a covered-write? LO.1
To allow for increased upside potential for the covered-write, an investor could purchase a vertical call spread. True or false? LO.1
What is the delta of a covered-write consisting of 100 shares of long stock and short a delta call of 40? LO.1
Does time decay have a positive or a negative effect on the coveredwrite position? LO.1
If an investor’s opinion is neutral to bullish and he expects little change in the underlying price through expiration, would the investor want to sell a call that is at-the-money or out-of-the-money? LO.1
The profit for a covered-write strategy is limited to the premium received for the sale of the call. True or false? LO.1
How is the break-even point of the covered-write strategy calculated? LO.1
With a covered-write strategy, is the gamma at the highest or the lowest when the option is at-the-money? LO.1
An investor purchases stock at $100.00 and sells a 100 strike call against it for $8.00. Calculate the rate of return for the covered-write at expiration if the stock remains unchanged (assume expiration is thirty days away). LO.1
If an investor purchases stock at $105.00 and sells a 100 call against it for$7.00, what is the break-even point? (Assume thirty days to expiration.) LO.1
If an investor is bullish, anticipating a substantial rise in the underlying, and is considering a covered-write strategy, would he want to write a call that is at-the-money or out-of-the-money? LO.1
Relative to longer-dated options, do shorter-dated options have a higher or a lower rate of time decay? LO.1
Once the underlying breaks through the strike of the covered-write, the profit on the upside is capped. True or false? LO.1
To allow a covered-write to have more upside potential, would an investor buy or sell a vertical call spread? LO.1
A covered-write behaves like as a short put in terms of risk, reward, and break-even points. True or false? LO.1
What are the components of the XYZ 110115 bear credit spread?LO.1
What is the delta value of the XYZ 105115 bear put vertical?LO.1
What will be the delta value of the put vertical above if the underlying stock drops by $1.00?LO.1
An investor is long the XYZ Jan. 100110 call vertical, with the stock at 110.00. Is the vega on the spread positive or negative?LO.1
A debit spread takes advantage of theta decay over time. True or false?LO.1
What is the maximum risk of the XYZ 105115 put vertical if sold at$4.10?LO.1
What should be the fair value of the 100105 box with ninety days until expiration at an interest rate of 6.00?LO.1
An investor bought the XYZ 105110 call spread for $1.00 months ago and now the stock has rallied up. With the stock now above 110.00, he wants to take profits. Which is the best way to unwind the position, selling the 105110 call spread out or legging into the market neutral 105110 box spread?
An investor anticipates that XYZ has a bit higher to go and sees major resistance at the 115.00 level. He wants to play the move from 110.00 to 115.00. What is the best way to play it? A credit spread or a debit spread? (Assume buying on the offer and selling on the bid.)LO.1
An investor is long the 105110 call spread and would like to take advantage of a move up to 115.00. How can he roll the call spread to the 110115 call spread?LO.1
What are the components of a 110120 bull credit spread in XYZ?LO.1
What is the delta value of the XYZ Jan. 110115 call vertical?LO.1
What is the rate of change in the deltas for the XYZ Jan. 110115 call vertical?LO.1
In the case of a bull call spread, is the vega of the spread positive or negative if the underlying is at the short strike option?LO.1
Which spread, credit or debit, takes advantage of theta decay if the underlying stays the same till expiration?LO.1
What is the maximum risk of the XYZ 105110 call spread that was sold for a $3.30 credit?LO.1
Calculate the carrying cost of the 100110 box spread with 180 days till expiration at an interest rate of 4.25.LO.1
With the XYZ 5560 box value at $4.85 and the XYZ 5560 call spread value at $2.35, what should the XYZ 5560 put spread value be?LO.1
An investor is long the XYZ 7585 call spread, and the underlying is approaching 85.00. What two trades can he make to take profits on the trade and get into a neutral position in the stock?LO.1
An investor is long the XYZ 5560 call spread and would like to roll it up to the 6065 call vertical. What is the most efficient way to accomplish the roll?LO.1
The 110 put has a delta of –0.30, and the 120 call has a delta of +0.30.What is the delta of the 110/120 collar?LO.1
Combining a short underlying position with a reverse-collar creates a synthetic bear vertical spread. True or false?LO.1
Does the sensitivity of the delta of the collar increase or decrease as expiration approaches?LO.1
At-the-money options that are close to expiration have a greater gamma than at-the-money options with greater time left until expiration (assuming all other things being equal).True or false?LO.1
When the underlying price is near the long put, is the vega of the collar position positive or negative?LO.1
Is the theta of the reverse-collar positive or negative when the underlying is near the long call upper strike?LO.1
For a reverse-collar, the long put should be located as close to the trigger point as possible. True or false?LO.1
A “steep implied volatility skew” in ABC options means that the outof-the-money (puts) (calls) trade at a much higher implied volatility than the out-of-the-money (puts) (calls).LO.1
Applying a collar to an existing long underlying position converts the overall position to what kind of spread?LO.1
The break-even point of a collar that is initiated for a debit is the lower strike minus the spread debit, and the break-even point of a collar that is initiated for a credit is the upper strike plus the spread credit.True or false?LO.1
An investor has on a 100/110 collar. His trigger point was not reached by expiration. He decides to roll to the next expiration cycle. He can roll the position by (purchasing) (selling) the 100 put calendar spread and (purchasing) (selling) the 110 call calendar spread.LO.1
An investor has on the June 80/85 reverse-collar position. The market experiences a breakout. He can roll the position by (purchasing)(selling) the 85/90 vertical call spread.LO.1
ABC is trading at 170. He initiates the 150/190 collar for a debit. If ABC stays between 150 and 190 until expiration, will the position make or lose money?LO.1
Both the collar and reverse-collar are structured to minimize time decay as well as implied volatility risk. True or false?LO.1
Is determining the area of support of concern when initiating the collar or the reverse-collar spread?LO.1
Is determining the area of resistance of concern when initiating the collar or the reverse-collar spread?LO.1
The _____________ should be located as close to the trigger price as possible when structuring the collar, while the _____________ should be as close to the trigger price as possible for the reverse-collar.LO.1
ABC is trading at 95. He believes it is going to tank if it trades below 90. His technical indicators tell him there is a strong resistance at 100.Buying the 90/100 collar might be an appropriate strategy. True or false?LO.1
If the collar is initiated at a zero cost, what is the break-even point?LO.1
With a collar, what is the maximum upside profit potential on the long stock position?LO.1
If an investor purchases the following strangle, what are his breakeven points?Long 1 XYZ May 130 put at $10.00 Long 1 XYZ May 150 call at $12.00 LO.1
Does a long straddle have a positive or a negative gamma?LO.1
Calculate the gamma of the long 100115 strangle, if the call gamma 0.02 and the put gamma 0.02.LO.1
If a long strangle had a vega of 0.15, for every 1 percent change in the _________________________, the price of the strangle would change by 0.15.LO.1
The delta of the short straddle moves against the position as the underlying moves. True or false?LO.1
A long strangle has a positive vega. True or false?LO.1
Theta is the rate at which the ____________ of the short straddle change is sensitive to the amount of time left until expiration.LO.1
Will the theta of the short strangle increase or decrease as expiration approaches?LO.1
Do short straddles and strangles have a negative or a positive time decay?LO.1
Does a long straddle have plus or minus vega, and does it have plus or minus theta?LO.1
If you are expecting a “breakout” to take place, which two strategies might you employ?LO.1
If you were long the XYZ March 50 straddle and XYZ had dropped in price you might consider rolling down the put to 40, leaving you with the 4050 ______________.LO.1
If you initiate a short straddle with both options at-the-money, the options will each have a delta of approximately 50 and will offset each other just as with the long straddle. True or false?LO.1
What are the break-even points for the long straddle: strike (plus or minus) the premium on the downside, and strike (plus or minus) the premium on the upside?LO.1
The deltas will approach ________ as the at-the-money straddle nears expiration.LO.1
What is the maximum loss for the short straddle (include upside and downside)?LO.1
Short-dated at-the-money options have a (lower) (higher) gamma than at-the-money options with a greater amount of time to expiration.LO.1
A gamma of 0.10 means that the delta of the overall position would change against the trader by approximately ______ for every 1 point the underlying moves.LO.1
When trading straddles and strangles from the short side, it is important to set a ______________ on the straddle or strangle price.LO.1
When an underlying is experiencing a subdued low-magnitude movement around the strike price, which two strategies might you consider employing?LO.1
A long butterfly contains an embedded synthetic short straddle wrapped by a synthetic long ________.LO.1
Placing the middle strike of the long butterfly at the underlying’s current price creates a position that has a (positive) (negative) theta.LO.1
A long condor can be used when one expects a sideways market with a wider range. True or false?LO.1
The long butterfly will have a (positive) (negative) delta when the underlying is trading below the middle strike, and a (positive)(negative) delta when the underlying is above the strike.LO.1
The Greeks of the call, put, and iron butterflies, having the same strikes and times to expiration, should always be equal. True or false?LO.1
In the case of the long butterfly, does a gamma of –0.07 mean that the overall delta of the position would change for or against the trader for every 1 point the underlying moves?LO.1
Does an at-the-money long butterfly have a negative or a positive theta?LO.1
The delta of the long condor is approximately neutral at the midpoint between the two middle strikes. True or false?LO.1
When it is near expiration, and the underlying is near the strikes of the short options, will the position have a large positive or negative gamma?LO.1
Is a long at-the-money condor long or short vega? Therefore, will the value of the condor rise or fall when implied volatility rises?LO.1
Calculate the theta of the following long call condor:410 strike call theta 0.03 420 strike call theta 0.07 430 strike call theta 0.04 440 strike call theta 0.02 LO.1
Will the theta of the at-the-money long condor increase or decrease over time?LO.1

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Option Spread Strategies Trading Up Down And Sideways Markets 1st Edition Anthony J Saliba ,Joseph C Corona ,Karen E Johnson - Solutions

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