
Combinations of Options: Trading Strategies 333
portfolio can be established. If the stock price increases, the
portfolio value would also increase.
Calls with di erent exercise prices can be used to form
money spreads. If the stock prices are expected to be
between the two exercise prices, a low-exercise-price call
will be bought and a high-exercise-price call will be written.
If the stock price is expected to decrease, the call with the
low exercise price will be written and the call with the
higher exercise price will be bought. Money spreads can
also be created using put options.
A box spread involves ...