Option Strategy Assignment
You have read about it, but now it is time to get your hands a little dirty and build your own strategies with real data. Lots of discount brokers are encouraging option trading and the potential profits are amazing… but so are the potential losses. At the conclusion of this assignment, you will understand how you could make or lose money with a series of options strategies. Buyer (or seller) beware.
You will be harvesting your own options chain from BarChart.com (Links to an external site.). All strategies need to use Activision Blizzard, Inc. (ticker: ATVI) as the underlying security. If for some reason, this website is not loading prices for you, then you are welcome to use another site. One alternative option is Big Charts (Links to an external site.), but there are many options chain vendors online. Ultimately, I want to see a screen snip of the options chain used for every options strategy below. If I cannot verify your math, then it is wrong. Use a strike month that is 2-3 months in the future.
At the very top of your paper, I want to see two things: (1) the current price of ATVI at the time that you captured the options chain; and (2) a screen snip of the entire options chain (example below from a different company).
I want to see you discuss each strategy using a table that looks like what I showed you in the textbook and for each strategy in the lesson. All formulas should be shown in this table for all options strategies in this paper. This is so that I can see exactly how you derived your numbers. If I need to hunt for your math and it looks like it might be wrong, then it will be marked wrong…show me how you calculated each and every value. Everything within the table should be in contract-level terms (i.e. $15.75 not $1,575), not total-dollar terms. You need to add a cell for “Net Premium PAID” to each table for the combination strategies (i.e., long straddle, bull call spread, and the collar).
everything is done in the file attached just the calculations need to be done according to various formulas.
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