OPT1 Puts and Calls

A share and a call and a put at the same strike trade together.

Objective

Trade the share and the two options. Assessed on profit and loss.

What it shows

• The payoff of a call and a put, and of the two together.
• Put-call parity: the call, the put and the share are priced against one another.
• Options as a way to take a view with limited loss.

Watch out for

• Buying an option and treating it as a share.
• Time decay on a position held to the end of the session.
• A call and a put whose prices break parity, and a student who does not see it.

Who takes part

• Trader — every student. Trades SHARE, C50, a call at 50, and P50, a put at 50.

Class size

Ten to forty students in one role. The first case of the options track.