ASX Options
Clever products for clever investors
BULL STRATEGIES
Overall, these positions will do better if the stock or index market rises.
NEUTRAL STRATEGIES
Overall, these positions will do better if the stock or index market does not move very much.
BEAR STRATEGIES
Overall, these positions will do better if the stock or index market falls.
Synthetic Long
Long Butterfly
Short Straddle
Synthetic Short
Example: Buy 1 Call and Sell 1 Put at the same strike Market Outlook: Bullish Risk: Substantial Reward: Unlimited Increase in Volatility: Neutral Time Decay: Neutral
Example: Sell 2 Calls, Buy 1 Call at higher strike and Buy 1 Call at lower strike Market Outlook: Neutral Risk: Limited Reward: Limited Increase in Volatility: Typically hurts position Time Decay: Typically helps position
Example: Sell 1 Call and Sell 1 Put at the same strike Market Outlook: Neutral Risk: Unlimited Reward: Limited Increase in Volatility: Hurts position Time Decay: Helps position
Example: Buy 1 Put and Sell 1 Call at the same strike Market Outlook: Bearish Risk: Unlimited Reward: Substantial Increase in Volatility: Neutral Time Decay: Neutral
ASX OPTIONS SINCE 1976
Long Call
Contracts Traded 16,000,000 14,000,000 12,000,000 10,000,000
Example: Buy 1 Call Market Outlook: Bullish Risk: Limited Reward: Unlimited Increase in Volatility: Helps position Time Decay: Hurts position
Index Points 4000
Retail option courses commenced Margin lending as collateral
Long Put
3500 3000
87 market correction
2500 2000 1500
Automated trading introduced CLICK O/seas market makers introduced
Example: Buy 1 Put Market Outlook: Bearish Risk: Limited Reward: Substantial Increase in Volatility: Helps position Time Decay: Hurts position
8,000,000 6,000,000 4,000,000 2,000,000 0
1000 500 0
Call Backspread
75/76 76/77 77/78 78/79 79/80 80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02
Put Backspread
Options Volume
All Ords Index
THE OPTIONS STRATEGY SPECTRUM
Example: Sell 1 Call and Buy 2 Calls at a higher strike Market Outlook: Bullish Risk: Limited Reward: Unlimited Increase in Volatility: Typically helps position Time Decay: Typically hurts position
Bullish
Neutral
write straddles or combinations
Bearish
Example: Sell 1 Put and Buy 2 Puts at a lower strike Market Outlook: Bearish Risk: Limited Reward: Substantial Increase in Volatility: Typically helps position Time Decay: Typically hurts position
Bull Spread
bull spreads buy stock, sell call buy bonds, sell put buy call
bear spreads overwrite buy protective put buy put
Bear Spread
Example: Buy 1 Call (Put) and Sell 1 Call (Put) at higher strike Market Outlook: Moderately Bullish Risk: Limited Reward: Limited Increase in Volatility or Time Decay: Helps or hurts depending on strikes chosen
Example: Sell 1 Put (Call) and Buy 1 Put (Call) at higher strike Market Outlook: Moderately Bearish Risk: Limited Reward: Limited Increase in Volatility or Time Decay: Helps or Hurts depending on strikes chosen
Buy Write
Short Butterfly
Long Straddle
Short Call
Example: Buy 1000 shares and Sell 1 Call Market Outlook: Neutral to Slightly Bullish Risk: Substantial Reward: Limited Increase in Volatility: Hurts position Time Decay: Helps position
Example: Buy 2 Puts, Sell 1 Put at higher strike and Sell 1 Put at lower strike Market Outlook: Strong move in either direction Risk: Limited Reward: Limited Increase in Volatility: Typically helps position Time Decay: Typically hurts position
Example: Buy 1 Call and Buy 1 Put at the same strike Market Outlook: Strong move in either direction Risk: Limited Reward: Unlimited Increase in Volatility: Helps position Time Decay: Hurts position
Example: Sell 1 Call Market Outlook: Neutral to Slightly Bearish Risk: Unlimited Reward: Limited Increase in Volatility: Hurts position Time Decay: Helps position
Supplied by ASX Options Business Development. Visit [Link]/options or call 1300 300 279 for more information on the range of courses available to both investors and brokers. Options courses are accredited for both structured & unstructured CPD points.
Information provided by ASX does not constitute advice or recommendation of a particular product or class of product and investors should consider obtaining independent advice before making any financial decisions. ABN 98 008 624 691
