Options Characteristics Quad Flashcards
Long Call
(Top-left quad) Bullish Right to buy Max G = unlimited Max L = Premium B/E = Strike + Premium
Short Call
(Top-right quad) Bearish Obligation to Sell Max G = premium Max L = unlimited B/E = strike + premium
Long Put
(Bottom-left quad) Bearish Right to Sell Max G = B/E to $0 underlying Max L = Premium B/E = Strike - premium
Short Put
(Bottom-right quad) Bullish Obligation to Buy Max G = Premium Max L = B/E to $0 underlying B/E = Strike - premium
Long Call (Cash flows)
Option = - (outflow by purchasing contract)
Stock = - (outflow by purchasing stock as a result of holder exercise)
Long Put (Cash flows)
Option = - (outflow to purchase contract)
Stock= + (inflow as a result of holder exercising option, selling stock)
Short Call (Cash flows)
Option = + (inflow from selling contract and receiving premium)
Stock = + (inflow from stock sold to holder of contract)
Short Put (Cash flows)
Option = + (inflow from selling contract premium received)
Stock = - (outflow from obligation to purchase stock on exercise)
To Reverse Collar a short stock position:
Take both upside strategies (bottom-right to top-left)
Long Call and Short Put
To Collar Long stock position:
Take both downside strategies (top-right to bottom-left)
Long Put and Short Call
Long Straddle (Quad Location)
Left-side horizontal strategies: Long Call and Long Put
Short straddle (Quad location)
Right-side horizontal strategies: Short Call and Short Put
Spread (Quad location)
Call spread is vertical Top-half (Long call and short call)
Put Spread is vertical Bottom-half (Long Put and Short Put)
Synthetic Long Stock position (Quad)
Upside strategies (bottom-right to top-left)
Long Call, Short Put
Synthetic Short Stock position (Quad)
Take both downside strategies (top-right to bottom-left)
Long Put, Short Call
