Ten Basic Steps...

Win O R S, Simulation of Option Strategies…

Step One: Start Win O R S.   Additionally, open a Microsoft Word document. If this is the first Word document for this assignment, then start Word by use of the Windows Start menu. If you have previously created a Word document then you must open the document by using the following Win O R S menu tree:. Solution.. Open M-S Word document…

Step Two. Select the menu sequence:. Applications. Finance methods. Options Analysis. Open Template. Equity Option…

Step Three.  The Equity option lookup screen appears next.  The input box requires the equity symbol.  Upon entering the equity symbol, press O-K to produce the real-time options chain.  If you are not sure of the equity symbol, then press the Search button…

Step Four: The List of Traded Options appears next.  Note the title bar. The name of the selected firm appears with the last traded price.  It is important to know the last traded price when building a butterfly spread.  Select up to four call options and four put options.  Use the standard Windows keystrokes for multiple selection.  That is, hold down the C-T-R-L key and click with the left-mouse button.  NOTE:.  for this analysis the selected options must each have the same expiration date.  Click on O-K when done…

Step Five: If this is the first execution, then The Option Strategies screen appears next.  If you have already solved at least one strategy, then click the butterfly glyph to produce The Option Strategies screen.  The default selection on The Option Strategies screen is the butterfly spread.  Change as needed. Click O-K when ready…

Step Six: The Simulation Parameters for the Option Strategy screen appears next.  Generally, you will accept the default entries. Click on the help button for a more advanced discussion of each parameter.  Click O-K to continue…

Step Seven:  The solution is presented next in a split screen format. The profit profile chart is presented as the top panel.  The bottom panel shows the option-based portfolio…

Step Eight:  print the results to the attached Word document. Choose the menu sequence:

Step Nine: If you have completed all simulations, then go to step ten.  If you have additional strategy simulations to execute, go back to step five…

Step Ten:  Save, edit, and close all documents and applications.

This completes the ten basic steps for the option strategy simulation.

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