11
Combinations of Options: Trading Strategies
Learning Objectives
After completing this chapter, you will be able to answer the following questions:
- What is the rationale for combining options and the underlying security?
- What is meant by covered call writing?
- What is meant by a protective put?
- What is meant by spread trading using options?
- What is meant by straddle trading using options?
- What are strips, straps and strangles?
In Chapter 10 we saw the factors that affect the values of calls and puts and the price expectations under which one would buy calls, write calls, buy puts, and write puts. In Chapter 9, we saw that there will be a large number of calls and puts available in the market at the same time with different exercise prices ...
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