Featured Pathways

More pathways

Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

More pathways

Book a demo

Pricing

Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

Book a demo

Pricing

Ready to get started?

Featured Pathways

More pathways

Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

More pathways

Book a demo

Pricing

Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

Book a demo

Pricing

Ready to get started?

Book a demo

Pricing

Ready to get started?

Equity Index Options Exercises

Equity Index Options Exercises

Lindsey Matthews

30 years: Risk management & derivatives trading

In this video, Lindsey uses the knowledge of equity index options to complete a few exercises.

In this video, Lindsey uses the knowledge of equity index options to complete a few exercises.

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Equity Index Options Exercises

3 mins 59 secs

Key learning objectives:

  • Apply your knowledge of equity index options to complete 5 exercises

Overview:

Equity index options exist as both options on futures (which settle into a position in the futures if exercised) and options on the underlying index (which cash settle). The FTSE index options cash settle, using the same settlement price, the exchange delivery settlement price, as the futures cash settle against.

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Summary

Using the options grid, what would it cost to buy the 5,900 call and sell the 5,950 put?

Buy 5,900 call: -160.5

Sell 5,950 call: +127.5

-160.5 + 127.5 = -33

Cost is 33 index points.

If you buy the 5,900 call and sell the 5,950 call, what does the break-even graph for this position look like? 

Individually, the two payoffs can be displayed as follows: 

The combined payoff is known as a long call spread and can be displayed as follows: 

Once the costs have been included: 

Using the option pricing grid above, what would it cost to buy the 5,950 put and sell the 5,900 put?

Buy 5,950 put: -158.5

Sell 5,900 put: +129.5

Paying out 29 index points

If you buy the 5,950 put and sell the 5,900 put, what does the break-even graph for this payoff look like?

The combined position is known as a long put spread and gives the following payoff before considering costs: 

Once costs have been included, the payoff looks like the following: 

What does the combined position of the long call spread and the long put spread look like? 

Combining the two positions gives a flat payoff of 50 points, however, the position has cost 62 points resulting in a payoff of a flat -12 points regardless of the futures price. 

 

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Lindsey Matthews

Lindsey Matthews

Lindsey runs Perfordiant, an investment risk and performance consulting firm. He has worked in financial markets since 1992. Lindsey became an MD in fixed income and equities, ran a Risk function, and was on the management team of an Asset Management fintech business. Lindsey is now a Visiting Fellow at the Henley Business School, and resides on the board of CFA UK.

There are no available Videos from "Lindsey Matthews"