options

These are simple portfolios of two positions: an option + the underlying stock. 1) A protective put is long put + long stock and has a profit profile similar to a long call; 2) its counterparty is short put + short stock and has a profit profile similar to a short call. 3) a covered call is long...

It is never optimal to early exercise a call option on a non-dividend-paying stock but it may be advisable to early exercise a call on a dividend-paying stock. For a put option, it is maybe optimal to early exercise a put on EITHER a dividend- or non-dividend-paying stock. The primary trade-off...

If X = strike price, the upper bound for a American put option is P <= X, which makes sense. For a European put option, you must add a time value component to the upper bound [p <= X*exp(-rt)] since you have to wait until the expiration date to receive proceeds from the sale of the underlying...

This is a resource I made by myself for a quick summary on basic Options Strategy.. I made this 3 years back or so.. So it's a bit ancient for me.. https://www.dropbox.com/s/q56ryasdnfulv27/option_pay_off.pdf?dl=0 Hope its useful. Jairam