Equity Index Options Exercises

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.