# Box spread option example

For parity, the profit should be zero. Otherwise, there is a certain profit to be had by creating either a long box-spread if the profit is positive or a short box-spread if the profit is negative.

The long box-spread comprises four options, on the same underlying asset with the same terminal date. We can obtain a third view of the long box-spread by reading the table diagonally. Hence there is a nominal profit of 30 cents to be had by investing in the long box-spread.

To what extent are the various instruments introduced above traded on exchanges? Chaput and Ederington, surveyed Chicago Mercantile Exchange 's market for options on Eurodollar futures. Guts constituted only about 0.

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Note that directly exploiting deviations from either of these two parity relations involves purchasing or selling the underlying stock. The subtraction done one way corresponds to a long-box spread; done the other way it yields a short box-spread. The pay-off for the long box-spread will be the difference between the two strike prices, and the profit will be the amount by which the discounted payoff exceeds the net premium.

For parity, the profit should be zero. Otherwise, there is a certain profit to be had by creating either a long box-spread if the profit is positive or a short box-spread if the profit is negative.

The long box-spread comprises four options, on the same underlying asset with the same terminal date. We can obtain a third view of the long box-spread by reading the table diagonally. Hence there is a nominal profit of 30 cents to be had by investing in the long box-spread.

To what extent are the various instruments introduced above traded on exchanges? Chaput and Ederington, surveyed Chicago Mercantile Exchange 's market for options on Eurodollar futures. Guts constituted only about 0. From Wikipedia, the free encyclopedia.

Energy derivative Freight derivative Inflation derivative Property derivative Weather derivative.