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KembaraXtra – Islamic Derivatives: Applying “1 Option = 100 Shares” (All 4 Cases with Scenario)
🔹 Common Setup (Same for All)
👉 Total premium paid/received =
RM2 × 100 = RM200
🔹 1. Long Call (Buy Call) 📈
👉 Expect price to increase
📅 Scenario: Price rises to RM15
👉 Net profit:
📅 If price falls
👉 Loss = RM200 only ❌
🔹 2. Short Call (Sell Call) 📉
👉 Expect price to stay or fall
📅 Scenario: Price rises to RM15
👉 Net loss:
📅 If price stays below RM10
👉 Profit = RM200 (premium) ✅
🔹 3. Long Put (Buy Put) 📉
👉 Expect price to decrease
📅 Scenario: Price falls to RM5
👉 Net profit:
📅 If price rises
👉 Loss = RM200 only ❌
🔹 4. Short Put (Sell Put) 📈
👉 Expect price to stay or rise
📅 Scenario: Price falls to RM5
👉 Net loss:
📅 If price stays above RM10
👉 Profit = RM200 (premium) ✅
🔹 Key Pattern (Very Important)
👉 Always multiply by 100 shares
🔹 Simple Summary
👉 All results must be × 100 shares
🔹 Final Exam Insight
👉 “Since each option contract represents 100 shares, all profits, losses, and premiums must be multiplied by 100 when calculating outcomes for long and short call and put positions.”
🔹 Common Setup (Same for All)
- Strike price = RM10
- Premium = RM2
- Contract size = 100 shares
👉 Total premium paid/received =
RM2 × 100 = RM200
🔹 1. Long Call (Buy Call) 📈
👉 Expect price to increase
📅 Scenario: Price rises to RM15
- Gain per share = RM5
- Total gain = RM5 × 100 = RM500
👉 Net profit:
- RM500 − RM200 = RM300 profit ✅
📅 If price falls
- Do not exercise
👉 Loss = RM200 only ❌
🔹 2. Short Call (Sell Call) 📉
👉 Expect price to stay or fall
📅 Scenario: Price rises to RM15
- Loss per share = RM5
- Total loss = RM500
👉 Net loss:
- RM500 − RM200 = RM300 loss ❌
📅 If price stays below RM10
- Option not exercised
👉 Profit = RM200 (premium) ✅
🔹 3. Long Put (Buy Put) 📉
👉 Expect price to decrease
📅 Scenario: Price falls to RM5
- Gain per share = RM5
- Total gain = RM500
👉 Net profit:
- RM500 − RM200 = RM300 profit ✅
📅 If price rises
- Do not exercise
👉 Loss = RM200 only ❌
🔹 4. Short Put (Sell Put) 📈
👉 Expect price to stay or rise
📅 Scenario: Price falls to RM5
- Loss per share = RM5
- Total loss = RM500
👉 Net loss:
- RM500 − RM200 = RM300 loss ❌
📅 If price stays above RM10
- Option not exercised
👉 Profit = RM200 (premium) ✅
🔹 Key Pattern (Very Important)
👉 Always multiply by 100 shares
- Profit/loss per share × 100
- Premium × 100
🔹 Simple Summary
- Long call → profit when price ↑
- Long put → profit when price ↓
- Short call → risk when price ↑
- Short put → risk when price ↓
👉 All results must be × 100 shares
🔹 Final Exam Insight
👉 “Since each option contract represents 100 shares, all profits, losses, and premiums must be multiplied by 100 when calculating outcomes for long and short call and put positions.”
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