An option trader decides to short an ATM straddle for Gold FEB-2020 options. The current price is 1464.5. Please answer following. 1. What is the underlying premise for this strategy? 2. What does trader want to happen to gold over the life of these options? 3. Is this strategy initially Delta neutral? Gamma neutral? Vega Neutral? If not, what are the hypothetical values of these greeks (maximums, minimums, zero?) 4. Using the option data below, build me a payoff table for these options, with breakeven prices, and maximum profit. 5. If, the strategy starts to loose money, what can the trader do to mitigate loses? What strike priced options might on use. Prior 20.5 Charts Last Change Low Volume Settle Show Feb-2020 Price 1464.5 -18.6 1483.1 1485.3 1463.3 305085 Chart 2 Calls Puts Prior Strike Prior Volume Change Last Last Change Volume Settle Price Settle High 0 44.6 - 1445 11.4 4.8 6.6 565 12 41 13 5.1 7.9 1859 -12.2 -12.4 28.8 25.1 1450 1455 13 37.5 15.9 6.4 9.5 127 565 34.3 -11.8 22.5 1460 17.9 6.7 11.2 611 46 31.3 -11.3 20 1465 20.5 7.3 13.2 1278 410 28.5 -10.5 18 1470 23.1 7.6 15.5 194 24 26 -9.8 16.2 1475 21.6 3.7 17.9 10 97 23.7 -8.4 15.3 1480 29.7 9.1 20.6 47 24 26 -9.8 16.2 1475 21.6 3.7 17.9 10 97 23.7 -8.4 15.3 1480 29.7 9.1 20.6 47 28 21.5 - 1485 33.2 9.8 23.4 27 145 19.6 -7.8 11.8 1490 30.2 3.7 26.5 57 HTML Editora B I VA - A IX E SEX X5 E TT TT 12pt Paragraph An option trader decides to short an ATM straddle for Gold FEB-2020 options. The current price is 1464.5. Please answer following. 1. What is the underlying premise for this strategy? 2. What does trader want to happen to gold over the life of these options? 3. Is this strategy initially Delta neutral? Gamma neutral? Vega Neutral? If not, what are the hypothetical values of these greeks (maximums, minimums, zero?) 4. Using the option data below, build me a payoff table for these options, with breakeven prices, and maximum profit. 5. If, the strategy starts to loose money, what can the trader do to mitigate loses? What strike priced options might on use. Prior 20.5 Charts Last Change Low Volume Settle Show Feb-2020 Price 1464.5 -18.6 1483.1 1485.3 1463.3 305085 Chart 2 Calls Puts Prior Strike Prior Volume Change Last Last Change Volume Settle Price Settle High 0 44.6 - 1445 11.4 4.8 6.6 565 12 41 13 5.1 7.9 1859 -12.2 -12.4 28.8 25.1 1450 1455 13 37.5 15.9 6.4 9.5 127 565 34.3 -11.8 22.5 1460 17.9 6.7 11.2 611 46 31.3 -11.3 20 1465 20.5 7.3 13.2 1278 410 28.5 -10.5 18 1470 23.1 7.6 15.5 194 24 26 -9.8 16.2 1475 21.6 3.7 17.9 10 97 23.7 -8.4 15.3 1480 29.7 9.1 20.6 47 24 26 -9.8 16.2 1475 21.6 3.7 17.9 10 97 23.7 -8.4 15.3 1480 29.7 9.1 20.6 47 28 21.5 - 1485 33.2 9.8 23.4 27 145 19.6 -7.8 11.8 1490 30.2 3.7 26.5 57 HTML Editora B I VA - A IX E SEX X5 E TT TT 12pt Paragraph
