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non-synthetic futures and option strategies

eurodollar futures prices catch bid on cpi, euro debt

traders bid up for eurodollar futures contracts as moody's downgrade's ireland's debt and on fears greece might have to restructure its debt.

long call butterfly

long call butterfly

long butterfly spreads are entered when the investor thinks that the underlying stock will not rise or fall much by expiration. using calls, the long butterfly can be constructed by buying one lower striking in-the-money call, writing two at-the-money calls and buying another higher striking out-of-the-money call. a resulting net debit is taken to enter the trade.
butterfly spread construction
butterfly spread construction
buy 1 atthe money call
sell 2 at the money calls
buy 1 out the money call

short futures

short futures position

the short futures position is an unlimited profit, unlimited risk position that can be entered by the futures speculator to profit from a fall in the price of the underlying.

the short futures position is also used by a producer to lock in a price of a commodity that he is going to sell in the future. see short hedge.

short futures position construction
sell 1 futures contract

long futures

long futures position

the long futures position is an unlimited profit, unlimited risk position that can be entered by the futures speculator to profit from a rise in the price of the underlying.

the long futures position is also used when a manufacturer wishes to lock in the price of a raw material that he will require sometime in the future. see long hedge.

long futures position construction
buy 1 futures contract

long call

long call

the long call option strategy is the most basic option trading strategy whereby the options trader buy call options with the belief that the price of the underlying security will rise significantly beyond the strike price before the option expiration date.

long call construction
buy 1 at the money call

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