Derivatives assignment: Trading strategies with options
Trading strategies with options
I chose two company, one is NetFlix:
another is Asure Software:
You must use the information in these two link, not from other websites.
Analyze details about the companies and show option trading strategies with the payoff equations and graphs. See the following guidelines:
1. Describe each company’s business and prospect and show all analyses including the following measures: Past 6-month trend (graph), beta, standard deviation, and the expected price range (+- one sigma, 68% chance) based on the normal distribution. This is minimal requirements. You may add more measures or statistics from your own analysis.Then, show your expectation about the stock price and why
2. Based on your analyses above, make an appropriate option strategy for each company. Take the bull spreads. Use only April call options and justify that dividends will not be paid until the end of the option’s maturity.
3. On April 20th (expiration date), calculate profit or loss based on the underlying stock’s closing price.
4. Make a final report by adding profit or loss calculations.
Here is a sample document for the steps1,2. Please closely follow the sample to write (the sample is very detailed to explain the step1&2) But you need to work on step 3&4 on your own.
Tips: you can find the beta and so on from website “summary”, but the mean and standard deviation you need to download the excel to calculate.