Читать книгу Binary Options - Hamish Raw - Страница 25

Assuming the price of the downbet and put options are both 25 and the strike at A is $99, then the trader who bought the conventional put has a breakeven at C where the underlying is equal to $99 – 25¢ = $98.75.

The breakeven for the downbet buyer is at A, the strike, where the downbet is worth 50 and the buyer doubles his money. At B, an underlying of $98, both conventional put and downbet make a profit of 300%, but lower than $98 the conventional is now behaving like a short future.

The scale of Fig 1.7.4 might suggest that a short conventional put has a limited downside. It does, at the point where the stock is worth zero. If the downbet and put options are worth $10/pt, then with the underlying at zero, the maximum loss for the downbet would be limited to:

$10 ¥ ( 25 – 100 ) = – $750;

whereas the maximum loss for the conventional put would be:

$10 ¥ (0.00 – ( $99 – 25¢ ) = – $98,750.