Equity Price 120, No Dividend, Fed Funds 5.25%
Long 10 Calls, June 20, 1997, Expiration, 125 Strike, Trading at 5 Points
Short 10 Calls, June 20, 1997 Expiration, 135 Strike, Trading at 2 Points
1) Enter Call 1 information on option line 1, and Call 2 information on Option Line 2 as follows:
2) Enter Position, Strike, Expiration Date, and click on Option type. Then enter option value. Hit the tab key and Implied Volatility is Calculated.
3) Repeat for Call2.4) Click in the "Matrix/Graph Forecast" section / Option Value Radio Button
5) Click in the "Table Increments" field / and enter 5.
6) Cick in the "Create:" section and / Option 1.Button - a window will appear with a
forecast of option values for option 1.
7) Close the window and repeat 6 above for Option 2. as well
8) Click in the "Matrix/Graph Forecast" section / P&L Radio Button
9) Cick in the "Create:" section and / opt1+opt2+Under Radio Button - a window will appear with a forecast of total profit and loss for the trade given the market movements and stable volatility.
10) To view a Graph, Select "Graph" from the "Output" dropdown and then follow 6,7, or 9 above.
