10 Questions
What is the payoff for a Bull Call Spread strategy?
Limited to the difference between the two strike prices, minus the net premium paid
What is the payoff for a Long Straddle strategy?
Unlimited on the upside and limited on the downside
What is the payoff for a Short Straddle strategy?
Limited to the net premium received
What is the payoff for an Iron Condor strategy?
Limited to the net premium received
What is the payoff for a Butterfly Spread strategy?
Limited to the net premium received
What is the payoff for a Bear Put Spread strategy?
The payoff is limited to the difference between the two strike prices, minus the net premium paid.
What is the payoff for a Short Straddle strategy?
The payoff is limited to the net premium received.
What is the payoff for an Iron Condor strategy?
The payoff is limited to the net premium received.
What is the payoff for a Long Straddle strategy?
The payoff is unlimited on the upside and limited to the difference between the strike price and the net premium paid on the downside.
What is the payoff for a Bull Call Spread strategy?
The payoff is limited to the difference between the two strike prices, minus the net premium paid.
Study Notes
Options Trading Strategies
- A Bull Call Spread strategy's payoff is limited to the difference between the strike prices of the two options, minus the net debit.
- A Long Straddle strategy's payoff is unlimited on the upside, with a maximum loss equal to the total premium paid for the options.
- A Short Straddle strategy's payoff is limited to the total premium received, with unlimited potential losses on the upside and downside.
- An Iron Condor strategy's payoff is limited to the difference between the credit and debit, with a maximum loss equal to the difference between the strikes.
- A Butterfly Spread strategy's payoff is limited to the difference between the credit and debit, with a maximum loss equal to the difference between the strikes.
- A Bear Put Spread strategy's payoff is limited to the difference between the strike prices of the two options, minus the net debit.
- Note that the payoffs for the Short Straddle and Iron Condor strategies are repeated questions, with identical answers.
- Note that the payoffs for the Long Straddle and Bull Call Spread strategies are repeated questions, with identical answers.
Test your knowledge of options trading strategies with this quiz! Learn about bull call spreads, combinations, and other complex strategies, and understand their potential payoffs.
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