Setting Up a Long Straddle
One way to set up a long straddle is to buy a put and a call. You can do this
in your Profit & Loss quote window. Here
The first three lines of the Profit & Loss quote window contain information on
the underlying instrument. In our strategy, the underlying instrument does
not play a positional role. Nevertheless, we can display it in our portfolio
window to monitor the movement of the market.
Suppose we are trading the S & P 500, and we want to buy options that expire
in December. We can do this by displaying the portfolio window and entering the
instruments we want to trade. To display the portfolio window, follow these
steps:
1. Display the Main Menu.
2. Select Add Window.
3. Select OqPL5.
To use the window, first you will want to display the underlying instrument,
SPZ3, in the underlying instrument section of the portfolio window. To do this,
follow these steps:
1. Type SPZ3
2. Press
Now that you have established the underlying instrument, you are ready to
choose options for your position. In this example, the market is at 465.70. As
you go through this example, you will need to adapt the instructions to the
market conditions you encounter. Suppose we want to build a position using an
at-the-money call and put. The next step is to enter a 465 call. To do this,
follow these steps:
1. Type a comma and then the symbol for the 435 call.
Type ,SPM435C
2. Press
In the last two steps, you placed a comma before the symbol you typed. This
is important. The comma tells Aspen Systems to skip the first symbol (our
underlying instrument) and display the instrument in the next available slot. In
the next instruction, you will place two commas before the put symbol. This will
cause Aspen Systems to skip not only the underlying instrument and the call we
have already entered in the window, but also to skip a line after the call
symbol.
1. Type two commas and then the symbol for the 435 put.
Type ,,SPZ435P
2. Press
Obviously, the extra spaces serve only to space out the numbers, making the
window a little easier to read.
Having entered these symbols, the question now becomes,
Now, we
1. Double-click on the Qty cell next to the call symbol.
2. Type 10.
3. Press
4. Double-click on the call
5. Type the price of 9.55.
6. Press
7. Double-click on the Qty cell next to the put symbol.
8. Type 10.
9. Press
10. Double-click on the put
11. Type 11.35.
12. Press
The Window Selection Menu is displayed.
The OqPL5 page is displayed.
SPZ3 is displayed as the underlying instrument.
The call is displayed in the options section of the portfolio window.
The put is displayed in the options section of the portfolio window, two lines
beneath the call symbol.
An edit box is displayed.
The number 10 is locked into the Qty field next to the call symbol.
An edit box is displayed.
The price of $9.55 is locked into the calls Price cell.
An entry box is displayed.
A quantity of 10 is locked into the puts Qty cell.
An entry box is displayed.
The price of $11.35 is locked into the puts Price cell.