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P&L<br />
P&L<br />
P&L<br />
P&L<br />
Options Trading: The Hidden Reality 265<br />
BULL SPREAD<br />
The demand-products and currency skews lose less on the downside and<br />
profit more on the upside, simply because the skew makes the bull<br />
spreads extra cheap to begin with (see Exhibit 10–15). Consider the<br />
soybean example in this chapter.<br />
The crash skew causes the bull spread to react in a way similar to<br />
the demand-products and currency skews on a rally, but it loses more<br />
than they do on a break.<br />
These profiles suggest that bear spreads will be more profitable<br />
with the bond and index skews than with the other types of skew (see<br />
Exhibit 10–16).<br />
Flat or No Skew<br />
Crash Skew<br />
Supply-Products Skew<br />
Demand-Products Skew<br />
©1996-2005 Charles M. Cottle RiskDoctor@RiskDoctor.com
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