Performance scenarios of a deal based on Options
Performance scenarios of a deal based on Options
PERFORMANCE SCENARIOS of a deal based on Options: Gold
Option – Call – European Style – Maturity March 2021.
| Parameters | Abbreviation | Value |
| Call opening price ($): | P | $2,500 (per contract) |
| Trade size (per ounces): | TS | 1 contract (equivalent to 100 ounces) |
| Strike Price: | S | $1,900 |
| Gold Futures Price ($): | PG | $1,850 |
| Premium ($): | PXTS | $2,500 |
| BUY / LONG | Gold FuturesPrice | Closing Price of gold futures (inc. spread) | Gold Price change | Net Profit/Loss |
| Favourable | $1,850 | $2,035 | 10% | $11,000 |
| Moderate | $1,850 | $1,942.5 | 5% | $1,750 |
| Unfavourable/Stress | $1,850 | $1,900 | 2.7% | -$2,500 (Max loss) |
| SELL / SHORT | Gold FuturesPrice | Closing Price of gold futures (inc. spread) | Gold Price change | Net Profit/Loss |
| Favourable | $1,850 | $1,900 | 2.7% | $2,500 |
| Moderate | $1,850 | $1,924 | 4% | $100 |
| Unfavourable | $1,850 | $1,942.5 | 5% | -$1,750 |
| Stress | $1,850 | $2,220 | 20% | -$29,500 |
To note that when you are buying an option, in this case buying Call Option, your risk is limited to the premium you have paid. Thus, the stress scenario is limited and known. However, in case you are short an option, in this case shorting a call option, your risk is unlimited and your stress scenario is not known.
Please be informed that the PnL will be always calculated in your trading Account’ currency.
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2022-04-21 • Updated
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