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Strategies & Market Trends : Options
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To: RocketMan who wrote (6497)4/15/2000 11:53:00 PM
From: rkral  Read Replies (1) of 8096
 
RM,
Say XYZ is at $100, and you buy one put and one call each for $10, for an investment of $20.

If the stock stays between $90 and $110 before expiration, you lose $2,000

Clarification for the record. RM, I know you know this and were probably just in a hurry.

At expiry the maximum loss of $2,000 only occurs when the stock is exactly $100(or almost so)where both options expire worthless. Otherwise one option or the other has intrinsic value ... for $1000 net loss at stock prices of $90 or $110 ... and breakeven at prices of $80 or $100.

Thanks for the great post.
Regards,
Ron
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