- Criteria for Successful Investing
- Risk Profile Charts
- The Definition of an Option
- The Valuation of Options
- Intrinsic and Time Value for Calls
- Intrinsic and Time Value for Puts
- The Seven Factors that Influence an Option's Premium
- Risk Profile Charts for Call Options
- Risk Profile Charts for Put Options
- Memory Tips for Long and Short Calls and Puts
- Basic Risk Profiles Summary
- Notation Standard for the Examples
- Chapter 1 Major Learning Points
Notation Standard for the Examples
As we go through several trade examples, I use the following notation standard when referring to the options.
- Expiration month | strike price | call or put
- December | 40 | call
- July | 30 | put
- December 40 call—A call with a strike price of $40, which expires in December
- July 30 put—A put with a strike price of $30, which expires in July
Sometimes I include the word strike as follows:
- December 40 strike call—A call with a strike price of $40, which expires in December
- July 30 strike put—A put with a strike price of $30, which expires in July
Strike prices and option premiums are notated without the dollar symbol ($) sign.
Stock prices and real dollar amounts are generally notated with the $ sign unless they are part of a formula.
Breakeven figures and nominal risk or reward figures are notated without the $ sign.
Where appropriate, strategy names and jargon are depicted in lowercase. This is the contemporary way.