• May 3rd, 2015

Option (Finance)

Paper, Order, or Assignment Requirements



Please read the file.

Instructions on Assignment:




The assignment is an individual written piece of work (as opposed to a piece of written group work) and you are required to answer all three elements of the question.


  1. The investment management department of your company has asked you to construct a speculative trading strategy using options for a £50,000 investment in a single FTSE 100 or FTSE 250 non-bank, non-insurance company’s shares for the 38 working day period between the 23rd February 2015 and 17th April 2015 (inclusive). The department has stipulated that your choice of strategies as one of either a:
  2. Butterfly, or
  3. Condor, or
  4. Strangle, or
  5. Strip, or
  6. Strap, or


  1. Supported with real market data as well as suitable academic literature, for the shares you wish to create an options trading strategy for, set up an options-based trading strategy (from the choices 1 to 5 above) given your view of:
  • the company,
  • current market sentiment regarding the segment in which it operates
  • and likely market movements over the period.

You must include ‘screen shot’ evidence the source of your options pricing in a suitably referenced appendix.

Describe the reasons why your chosen strategy is appropriate for the company you have identified and researched and present the expected profit/loss of your trading strategy using both a table and a graph.

                                                                                                    (1,000 Words  :  35 Marks)


  1. What is the annualised return that you are targeting based on your approach? Assess the risk that your strategy will not produce the returns you have anticipated as well as the risks that the use of such derivative has introduced to the company for whom you have created the strategy?

                                                                                                   (   500 Words  :  10 Marks)


  1. Report on the actual profit and loss of your strategy over the period and analyse and describe why your strategy achieved the results observed.

                                                                                                   (   500 Words  :  15 Marks)



The assignment should be word processed within the limit of 2,000 words (excluding appendices, tables, charts and graphs). The word count must be stated in the assignment. References to relevant academic theory and research findings should be provided and referenced appropriately.

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