It sounds like a bad translation of a manga title. But it actually refers to a type of derivatives strategy.
The structure involves buying and selling multiple options for the same underlying asset, possibly using multiple strike prices and expirations. Each part of the strategy is known as a "leg." The goal is to hedge a main bet, or to take advantage of a specific situation.
Examples of these multi-leg situations include butterflies, strangles, and straddles (again, sounds like we've dipped into one of the more adult-themed manga titles here).
Let's take a straddle as an example. It consists of purchasing a put and a call for the same underlying asset. The strike prices and the expirations are both the same as well.
The call represents one leg of the straddle. The put provides the other. A call is a bet that the price of the underlying asset will go up and a put is a bet that the price will go down.
In a straddle, the investor wins no matter which direction the asset moves, as long as it moves far enough to make up the cost of buying the put and the call. It represents a bet on volatility in general. In other words, it's not a bet about which way an asset will move. It's a bet on how far.
The investor thinks it will rise or fall by a large amount, and has set up a multi-legged strategy to take advantage of this projected move.
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Finance: What is Intrinsic Value (of An ...6 Views
Finance allah shmoop what is the intrinsic value of an
option All right this is brandi She owns a twelve
dollars strike price call option toe buy a share of
my fifteen minutes are up dot com a retirement home
chain for reality tv stars who recently gained self awareness
Well the stock is trading for fifteen bucks a share
of this moment Her strike price is twelve so the
intrinsic value of that option is fifteen minutes twelve or
three bucks that is it is three dollars in the
money and if brandy converted it into a share this
moment and then immediately sold the stock for fifteen dollars
in cash well she'd make three bucks But there's a
catch per call option doesn't expire for five weeks so
that three dollars in the money is actually worth more
than three dollars because she has data or time yet
to exercise and convert or just sell the option itself
So it's worth mohr because well a stock might go
up from fifteen dollars in overtime Stocks go up so
in the next five weeks well couldn't go up a
dime twenty cents twenty five cents and make that three
Dollars worth three ten three twenty three Twenty five Sure
sure it could happen So yeah that's The difference between
actual value and intrinsic value You get seita kickers in
there making the option's worth more than just converting them
into stock and selling them right there And yeah it
looks like our one and a half minutes are up
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