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TDY stock closed at 89-3/4 on September 30, 1982. If the price
of TDY stock declined from 89-3/4 to 70 or below, the September
30 box spread would be profitable.
On September 30, 1982, Mr. Resser established the following
butterfly spread position:
Option Long (Short) Quantity
April 75 Call 95
April 80 Call (190)
April 85 Call 95
This butterfly spread would achieve its optimum profitability if
the TDY stock price decreased to 80. The September 30 TDY stock
option transactions all occurred within a 10-minute period.
On October 1, 1982, Mr. Resser established a position that
could be described as a "double box" spread or as two butterfly
spreads. The spread consisted of the following:
Option Long (Short) Quantity
Jan 65 Call (129)
Jan 65 Put 129
Jan 70 Call 258
Jan 70 Put (258)
Jan 75 Call (129)
Jan 75 Put 129
As with the September 30 spreads, the October 1 position would be
able to generate profit if the price of TDY declined. The
October 1 transactions were reported as having occurred within a
16-minute period.
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Last modified: May 25, 2011