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20 Basic Options Strategies Payoff Table Notes

This document outlines the steps to create a payoff table for options strategies. It provides examples of payoff tables for long call, short call, long put, and short put strategies. The steps are: 1) Compare the daily market price to the exercise price, 2) Choose the appropriate profit/loss formula based on whether the market price is above or below the exercise price, 3) Calculate the daily profit or loss using the formula. Payoff tables are created to analyze the profit/loss outcomes of options strategies over different market price scenarios.

Uploaded by

Natasha Ghazali
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111 views

20 Basic Options Strategies Payoff Table Notes

This document outlines the steps to create a payoff table for options strategies. It provides examples of payoff tables for long call, short call, long put, and short put strategies. The steps are: 1) Compare the daily market price to the exercise price, 2) Choose the appropriate profit/loss formula based on whether the market price is above or below the exercise price, 3) Calculate the daily profit or loss using the formula. Payoff tables are created to analyze the profit/loss outcomes of options strategies over different market price scenarios.

Uploaded by

Natasha Ghazali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Prepared by

Dr Fahmi Abdul Rahim


UiTM Cawangan Melaka
Steps for payoff table
1. Compare daily market price with
exercise price

2. Choose profit or loss formula for


each trading day

3. Calculate daily total profit or loss


PAYOFF TABLE Day Market Price
LONG CALL 1 1488
Prepare payoff table for
long call strategy with 2 1540
exercise price of 1668
and premium 83 3 1668
4 1750
5 1880
PAYOFF TABLE LONG CALL
DAY MP XP CONDITION FORMULA PROFIT CALCULATION PROFIT
1 1488 1668 MP < XP -VE PRM -83 -83
2 1540 1668 MP < XP -VE PRM -83 -83
3 1668 1668 MP = XP -VE PRM -83 -83
4 1750 1668 MP > XP MP - XP - PRM 1750 - 1668 - 83 = -1
5 1880 1668 MP > XP MP - XP - PRM 1880 - 1668 - 83 = 129

Step 1:
Compare daily market price with
exercise price Step 2:
Choose profit or
loss formula for
each trading day
Step 3:
Calculate daily total profit or loss
Day Market Price

PAYOFF 1 1488

TABLE 2 1540
3 1668
SHORT CALL 4 1750
Prepare payoff table for
short call strategy with 5 1880
exercise price of 1668 and
premium 83
PAYOFF TABLE SHORT CALL
DAY MP XP CONDITION FORMULA PROFIT CALCULATION PROFIT
1 1488 1668 MP < XP +VE PRM 83 83
2 1540 1668 MP < XP +VE PRM 83 83
3 1668 1668 MP = XP +VE PRM 83 83
4 1750 1668 MP > XP XP - MP + PRM 1668 - 1750 + 83 = 1
5 1880 1668 MP > XP XP - MP + PRM 1668 - 1880 + 83 = -129

Step 1:
Compare daily market price with
exercise price
Step 2:
Choose profit or
loss formula for
each trading day
Step 3:
Calculate daily total profit or loss
PAYOFF TABLE Day Market Price
LONG PUT 1 1420
Prepare payoff table for long
put strategy with exercise 2 1590
price of 1618 and premium 68
3 1618
4 1780
5 1900
PAYOFF TABLE LONG PUT
DAY MP XP CONDITION FORMULA PROFIT CALCULATION PROFIT
1 1420 1618 MP < XP XP - MP - PRM 1618 - 1420 - 68 = 130
2 1590 1618 MP < XP XP - MP - PRM 1618 - 1590 - 68 = -40
3 1618 1618 MP = XP -VE PRM -68 -68
4 1780 1618 MP > XP -VE PRM -68 -68
5 1900 1618 MP > XP -VE PRM -68 -68

Step 1:
Compare daily market price with
exercise price
Step 2:
Choose profit or
loss formula for
each trading day
Step 3:
Calculate daily total profit or loss
Day Market Price

PAYOFF 1 1420

TABLE 2 1590
3 1618
SHORT PUT 4 1780
Prepare payoff table for
short put strategy with 5 1900
exercise price of 1618 and
premium 68
PAYOFF TABLE SHORT PUT
DAY MP XP CONDITION FORMULA PROFIT CALCULATION PROFIT
1 1420 1618 MP < XP MP - XP + PRM 1420 - 1618 + 68 = -130
2 1590 1618 MP < XP MP - XP + PRM 1590 - 1618 + 68 = 40
3 1618 1618 MP = XP +VE PRM 68 68
4 1780 1618 MP > XP +VE PRM 68 68
5 1900 1618 MP > XP +VE PRM 68 68

Step 1:
Compare daily market price with
exercise price
Step 2:
Choose profit or
loss formula for
each trading day
Step 3:
Calculate daily total profit or loss
Prepared by
Dr Fahmi Abdul Rahim

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