Page 2

Strike
Price

-5

Primary Call on Day 11 Price

Day 11 Buy Call 5 -4 Decreased

-3

Becomes
secondary call Primary Call ATM Secondary Put Day 10 Strike Price
on Day 11 on Day 10 Buy Call 4 -2 Buy Put 5 Day 10 Sell Put 5 for Profit -2 is breached

-1

Sell Call on Becomes

Loss Day Secondary Call Primary Call for
11 on Day 10 Day 1 Buy Call1 0

Primary Put for Secondary Put for Sell on Day 10 for

2 Buy Put 3 Day 2 Day 3 Profit

Primary Put for Stays Primary Put

4 Buy Put 4 Day 3 on Day 10
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Sell on Day 10 Buy Call 3 on Day

OTM Loss 2 Secondary Call 6 Now if price decreases do not act until it hits strike price -2

7 Then your Put 4 holds as primary put until Strike Price 6 is breached

8
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its strike price -2

ke Price 6 is breached
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Strike
Price

-4

-3

Day 2 Sell OTM Put

-2 Buy Put 2 for Loss

-1

Day 3 Sell
Primary Call for Secondary Put OTM Put
Day 1 ATM Day 1 Buy Call1 0 Buy Put 1 Primary Put for Day 1 for Day 2 for Loss

Day 2
Sell Call for Profit Secondary Call for Secondary Put Price
on Day 2 Day 1 Buy Call 2 2 Buy Put 3 Primary Put for Day 2 for Day 3 increased

Day 3
Sell Call for Profit Buy Call 3 on Day Price
on Day 3 2 Secondary Call 4 Buy Put 4 Primary Put for Day 3 increased

5
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Buy Call 4 on Day

3 Secondary Call 6 Now if price decreases do not act until it hits strike price -2

7 Then your Put 4 holds as primary put until Strike Price 6 is breached

8
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Day 1 ATM
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ke price -2

e 6 is breached