If the market goes up, you want to make a small profit; if it goes down, you want to make a small loss. How would you create such a “spread” strategy by trading some of the following options?
|
Stock Price |
Strike |
Expiration Month |
Call Price |
Put Price |
29 25 May 5 1
29 30 May 2 3
one has to long on may 25 call to make small profit if the market goes up and one has to short on May 30 call to to make a small loss if the market goes down.
thus the spread strategy will be long May 25 call and short May 30 call.
If the market goes up, you want to make a small profit; if it goes down,...