Details

Snapshot 1 shows a bear spread. This spread uses two option positions: a long call with a $35 strike price and a short call with a $30 strike price. (All other choices are selected as "none".) If the share price of the underlying stock at expiry is below $30 a $2 per share profit is made, whereas if the share price exceeds $35 at expiry, there is a $3 per share loss.

Snapshot 2 shows a protective put. This strategy buys a share of stock at $55 and buys a put option for $0.35 with a strike price of $53. Downside risk is limited to a loss of $2.35 on the share.

Snapshot 3 displays a butterfly spread. This spread uses four option positions: one long call with a strike price of $30, two short calls with a strike price of $36, and another long call with a strike price of $42. The spread is profitable if, at expiry, the share price is between $31.11 and $40.89.

Snapshot 4 displays a straddle. This strategy uses a long call option and a long put option, each having a strike price of $36. A profit is earned if the share price of the underlying stock, at expiry, is less than $31.72 or greater than $40.28.

Snapshot 5 displays a strangle. This strategy uses a long put option with a strike price of $41 and a long call option with a strike price of $47. A profit is earned if the share price of the underlying stock, at expiry, is less than $38.98 or greater than $49.02.

Reference

[1] D. M. Chance and R. Brooks, Introduction to Derivative and Risk Management, 9th ed., Mason, OH: South-Western Cengage Learning, 2013.