How to Map an Option Payoff: The Six Steps in Order
Mapping an option payoff is six steps in a fixed order. Write each leg as a signed primitive. Join the legs by level and by end date. State what each leg obliges and what the joined whole obliges. Work the payoff at stated prices. Cost the assembly by adding the premiums with their signs. Then mark what cannot be reached from what is actually held.
Most option positions arrive with a name attached, and the name is a shortcut. Shortcuts are wonderful right up to the moment an unfamiliar one arrives, at which point recognition has nothing to offer and reading is all that is left. The method below reads. The method never asks what an assemblyThe legs held together and read as one position. An assembly is a stack of contract rows, not a new kind of contract with terms of its own. is called. The name is not a field on any contract, and nothing settles against it.
A rent agreement somebody describes as standard works the same way. The word standard is a summary of what is usually in one. The summary is not a clause, nobody can be held to it, and the only way to know what has been agreed is to read the clauses in order. A legOne contract inside a larger position. A leg is complete on its own and keeps its own obligation however many other contracts sit beside it. is a clause. Six of them stacked is still six clauses, and each one obliges exactly what it says.
Every step in this method takes its input from the step before it. The order is fixed for that reason, and the sixth step is a step rather than a caveat for the same one. Step two cannot sort rows that have not been written. Step four cannot pick prices before step two has produced levels. By the time the sixth step runs, the split between figures that came out of arithmetic and figures that never arrived is settled. Nobody can know that split at the start.
What are the six steps, in the order they are run?
Here is the whole method in six instructions. Each is an instruction and nothing more. None of them explains what a call pays or why a written leg obliges anything. Both are settled elsewhere, and a procedure that stops to explain its own inputs is not a procedure any more.
- Write every leg out on its own rowOne row per contract, written as a signed primitiveA leg written as a plus or a minus against one call or one put at one level and one end date. Primitive means it cannot be broken into anything smaller.: four fields, always in the same order, sign, type, level, end date. Copy them off the contracts. Simplify nothing.
- Sort the rows and strike out what cancelsThis is the joinGrouping the rows by level and by end date and striking out whatever cancels. Joining is a sorting operation, not an act of judgement.. Sort the rows by level, lowest first, and within a level by date. Strike out any pair with the same type, the same level, the same date and opposite signs. What survives is an ordered list of levels.
- State the obligationOne sentence per surviving row. Then one more sentence for the joined whole, written from the rows rather than from the name.
- Work the payoff at stated pricesEvery level on the list, plus one price below the lowest and one above the highest. At each price, work each row on its own, negate the written rows, and add.
- Cost the assemblyAdd the premiums with their signs, carry the net to the end date at the financing cost for the period, and subtract. Run this step only where a premium exists for every leg.
- Mark what cannot be reachedWrite down, beside the arithmetic, every figure the assembly needs that is not to hand, and what each one would require.
The steps leave things out, and the omissions matter as much. There is no step that estimates anything, no step that ranks one assembly against another, and no step that asks which way the price is expected to go. The method produces a description. A description is not a view, and the method has no machinery for producing one.
How is each leg written down before anything else is done?
Step one has one instruction and it is deliberately dull. Copy each contract onto its own row with four fields in a fixed order, sign, type, level and end date, and stop there. The sign is a plus where the contract was bought and a minus where it was written. The type is a call or a put. The level is the figure written into the contract. The end date is when that leg finishes. A four-leg position is four rows. A nine-leg position is nine rows. Nothing at this stage requires knowing what the whole position obliges.
A row in that form is a signed primitive, and the word primitive is doing real work: it cannot be broken down into anything smaller, and it cannot be combined with anything else without the combination being recorded as a separate act. The distinction matters because the two commonest errors in reading a position both happen before any arithmetic starts. One is dropping the sign. The other is netting two rows mentally while the copying is still going on.
Here is the assembly the method is run on below. The assembly has a name in general use, and the name goes unstated. The method has to work without one, and a name would let recognition do the work instead. The reference asset has a spot price of Rs 2,000.00/-, it pays nothing at all while it is held, and financing costs 6.50 per cent a year. All four legs finish on the same date, one year out.
| Row | Sign | Type | Level | End date |
|---|---|---|---|---|
| 1 | plus one | put | Rs 1,600.00/- | one year |
| 2 | minus one | put | Rs 1,800.00/- | one year |
| 3 | minus one | call | Rs 2,200.00/- | one year |
| 4 | plus one | call | Rs 2,400.00/- | one year |
The four levels above are set at ten and twenty per cent either side of the spot price of Rs 2,000.00/-. Each of them is therefore a declared levelA level chosen here so a shape can be drawn. It is a working figure only. It carries no premium and it is not a level read off any venue.. A declared level is a working figure chosen so a shape can be drawn. A declared level carries no premium. The levels at which contracts are actually made available are set by an authority named further down, and a declared level says nothing about those. Step five turns on exactly this distinction, so the two stay separate from the start.
Write this leg as a signed primitive: a put sold at Rs 1,800.00/- which finishes in one year.
One more thing about step one before it hands over. A position handed over by somebody else has often been tidied already: two rows netted, a sign inferred from the name, a level dropped because it looked redundant. Tidying is exactly what step two does, under a rule, in the open, where it can be checked. Tidying done before the rows exist cannot be checked by anybody, including the person who did it.
An assembly has a bought call and a written call at the same level, ending on the same date. Before reading on, what does step two do with those two rows?
How are the legs joined, and what does joining actually mean?
The join is a sorting operation and then a single rule. Sort the rows by level, lowest first, and where two rows share a level, sort those by date. Then strike out any pair of rows that share a type, a level and a date and carry opposite signs, and leave everything else exactly where it is. The step ends there. No judgement enters it. A rule anybody can re-run produces the same result twice, and a tidy-up done by feel does not.
The join produces a level listThe ordered set of levels where something changes in an assembly, produced by sorting the surviving rows. Everything later in the method reads off this list.: the ordered set of levels where something in this position changes. Everything after step two reads off that list and nothing else. Step three writes one sentence per surviving row. Step four evaluates at those levels and two prices outside them. Step five adds the premiums attached to those rows. If the list is wrong, all three are wrong, and none of them will say so.
To show the rule biting, take the four rows above and hand them over the way a position sheet usually arrives: out of order, and with a pair in it that goes nowhere. Somebody has bought one call at Rs 2,000.00/- for one year and written one call at Rs 2,000.00/- for one year. Six rows now. Sort them, apply the rule, and the two rows at Rs 2,000.00/- meet all four conditions, so both are struck out. Four rows survive and the level list runs Rs 1,600.00/-, Rs 1,800.00/-, Rs 2,200.00/-, Rs 2,400.00/-.
Striking out is stronger than it sounds, so it is worth being clear about what the phrase means. Striking out does not mean the two contracts stop existing, and it does not mean somebody nets them off on the holder's behalf at the end date. The two payoffs add to nil at every price the reference asset could take, so no price exists at which leaving them in and taking them out give different answers. The claim covers all prices at once, and it holds for a reason that can be checked in one line: below Rs 2,000.00/- neither of the two calls is worth anything, and above Rs 2,000.00/- both are worth the same amount with opposite signs.
Sorting is easy to describe and hard to picture, so the control below assembles the four surviving rows one at a time, in the level order step two has just produced. The control starts at one leg and steps up. Each leg bends the line at its own level and nowhere else, the shape from the setting before is left behind as a faint outline so that what the newest leg changed is visible, and the readings at Rs 1,400.00/- and Rs 2,600.00/- are printed beside the line at each end. The finished shape arrives only when the fourth leg joins, and that arrival is the one thing a picture of the finished shape cannot show.
Join the legs one at a time, and watch each one bend the line
One control: how many of the four surviving rows have been joined so far, from one to four, in level order. The payoff line redraws after each leg joins. The axis never rescales, so every shape can be read against the one before it.
Educational illustration. Not a quotation, not a price, and not a prediction of any price. Assumptions on screen: all four legs end on the same date, one year out. Financing at 6.50 per cent for the year. No premium is supplied at any of these levels, so the diagram does not use that figure at all. The reference asset pays nothing while it is held. All four levels are declared and carry no premium. One unit throughout rather than one contract, and what one contract covers is set by an authority named further down.
Each setting changes the shape somewhere different, so step through the four of them slowly. With one leg joined, the bought put at Rs 1,600.00/- pays a payoff of Rs 200.00/- at Rs 1,400.00/- and nothing at all from Rs 1,600.00/- upward, and the stretch between those two prices is a slope rather than a flat: at Rs 1,500.00/- the payoff is Rs 100.00/-. Add the written put at Rs 1,800.00/- and that same stretch goes flat at minus Rs 200.00/-. Below Rs 1,600.00/- both puts are working, and they move together rupee for rupee. The slope has not gone anywhere; it has moved up to the stretch between Rs 1,600.00/- and Rs 1,800.00/-. Each leg bends the line at its own level and leaves the rest of the shape exactly where it was. A finished shape can therefore be read backwards into the rows that made it. The third leg, the written call at Rs 2,200.00/-, drags the right-hand end down to a payoff of minus Rs 400.00/- at Rs 2,600.00/-. The fourth, the bought call at Rs 2,400.00/-, lifts that end back to minus Rs 200.00/- and flattens it, and the gap between the pine line and the faint outline behind it is exactly what that last leg did.
How is the obligation of the whole stated once the legs are joined?
Step three is written, not thought. For each surviving row, one sentence. A bought row gives its holder a choice at its end date and obliges nothing further once the premium has changed hands. A written row obliges its holder to perform at somebody else's choosing, and the choosing is not theirs. Four surviving rows here, so four sentences: two rows give choices, and two rows hand a choice to whoever holds the other side.
Then one more sentence, and this is the sentence the whole method exists to produce. The sentence states what the joined whole obliges that no single row obliged on its own. For the four rows above it reads like this. Between Rs 1,800.00/- and Rs 2,200.00/- the assembly pays a payoff of Rs 0.00/-. Below Rs 1,600.00/- and above Rs 2,400.00/- it pays a payoff of minus Rs 200.00/-. In the two stretches in between it moves in a straight line from one of those readings to the other.
Write that sentence from the rows and never from the name. The name is a description of a shape somebody else drew, and the rows are the obligation. A useful test is to cover the name, hand the four rows to somebody who has not seen the position, and have that person write the sentence. Where the two sentences differ, one of the two readers took a row wrong, and finding out which is a five-minute job. Had both started from the name they would have agreed immediately and learned nothing.
Which prices is the payoff worked at, and why those?
Step four fixes the prices before it works anything, and the prices are not a matter of taste. Work the payoff at every level on the list from step two, plus one price below the lowest level and one above the highest. Here that is Rs 1,600.00/-, Rs 1,800.00/-, Rs 2,200.00/- and Rs 2,400.00/- from the list, plus Rs 1,400.00/- below and Rs 2,600.00/- above. The spot price sits at Rs 2,000.00/-, and a reader will look for it, so that price is worked too. Seven readings come out in all.
At each price, the instruction is mechanical. Work each row on its own. A call row pays the price less its level where that comes to more than nil, and nothing otherwise. A put row pays its level less the price where that comes to more than nil, and nothing otherwise. Negate every row carrying a minus. Add what is left. The figure that comes out is a payoff, and a payoff takes no account whatsoever of what was paid to put the position on.
| Price on the end date | plus put 1,600 | minus put 1,800 | minus call 2,200 | plus call 2,400 | Payoff |
|---|---|---|---|---|---|
| Rs 1,400.00/- | 200.00 | minus 400.00 | 0.00 | 0.00 | minus Rs 200.00/- |
| Rs 1,600.00/- | 0.00 | minus 200.00 | 0.00 | 0.00 | minus Rs 200.00/- |
| Rs 1,800.00/- | 0.00 | 0.00 | 0.00 | 0.00 | Rs 0.00/- |
| Rs 2,000.00/- | 0.00 | 0.00 | 0.00 | 0.00 | Rs 0.00/- |
| Rs 2,200.00/- | 0.00 | 0.00 | 0.00 | 0.00 | Rs 0.00/- |
| Rs 2,400.00/- | 0.00 | 0.00 | minus 200.00 | 0.00 | minus Rs 200.00/- |
| Rs 2,600.00/- | 0.00 | 0.00 | minus 400.00 | 200.00 | minus Rs 200.00/- |
Read the last column and say plainly what step four has produced. The answer is not what most people expect from a four-leg position. The payoff of this assembly is never above Rs 0.00/- at any price in the range. The payoff is nil across the middle, minus Rs 200.00/- at both ends, and somewhere between the two in the stretches that join them. The finding is about an obligation, not about whether anyone should hold it, and the method has no way of turning the first into the second.
Why does step four work the payoff at every level on the list plus one price below the lowest and one above the highest, rather than at a spread of round numbers?
One habit is worth building here and it costs nothing. Write the word payoff beside every figure in that table, in the table, not in a note above it. Step five is about to produce a second set of figures at the same seven prices, and the two sets are different quantities that happen to share a column width. A sheet where the label lives in a heading three rows up is a sheet where somebody eventually copies a cell into a sentence and calls it the wrong thing.
The four legs above sit at four declared levels, and this record prices none of them. What does step five produce here?
How is an assembly costed, and when can it not be?
Step five turns a payoff into a profit and it has three parts. Add the premiums with their signs, money out for a bought leg and money in for a written leg. The total is the net premiumThe premiums of every leg added with their signs. Money out on a bought leg counts as a plus, money in on a written leg as a minus.. Carry that net to the end date at the financing cost for the period. The premiums move at the start, the payoff arrives at the end, and the two are not the same money. Subtract the carried net from the payoff at each price. Out of that comes a profit, and the profit line sits a fixed distance below the payoff line at every single price rather than crossing it anywhere.
The step runs properly once on the only level in this record that carries a premium. A single bought call at Rs 2,000.00/- carries a premium given as Rs 180.00/-. The premium is supplied rather than worked out. At a price of Rs 2,400.00/- on the end date, that one row pays a payoff of Rs 400.00/-. The net premium is Rs 180.00/- out. Carried a year at 6.50 per cent, that is Rs 180.00/- multiplied by 1.065, or Rs 191.70/-. The profit is Rs 400.00/- less Rs 191.70/-, or Rs 208.30/-. And the price at which that profit is exactly nil is Rs 2,000.00/- plus Rs 191.70/-, or Rs 2,191.70/-.
Two figures in that paragraph are doing different jobs and it is worth separating them. Rs 180.00/- is given. The figure is not derived, and no step of this method could derive it. Deriving a premium needs a figure for how far the reference asset might move, and the record holds no such figure of any kind. Rs 191.70/- is arithmetic: a given premium multiplied by one plus a rate for a period.
Step five now runs on the assembly worked through above, and it stops. The four legs sit at Rs 1,600.00/-, Rs 1,800.00/-, Rs 2,200.00/- and Rs 2,400.00/-. Not one of those four levels carries a premium in this record, and the record holds no second premium at any other level or any other end date either. So the net premium cannot be added up. There is nothing to carry, so nothing can be carried to the end date. No profit line can be drawn at any price, and none is drawn. The cost of the assembly cannot be stated at all.
The stop is a full stop rather than a shortfall, and the difference matters more than it sounds. A method that estimated here would produce a profit line that looks exactly like the one above: same axes, same shape, same confident stroke. The only thing separating them would be a sentence somewhere admitting that one of the inputs was made up, and sentences like that are the first thing lost when a figure is copied into somebody else's working. Stopping leaves nothing to copy.
One last thing about step five, and it is the sort of detail that separates working somebody can re-run from working they cannot. The record carries the put at Rs 2,000.00/- as Rs 57.93/-, already a rounded figure. The unrounded one is Rs 57.9342723/-, and carried for one year at 6.50 per cent it comes to Rs 61.70/- exactly. Carrying the rounded Rs 57.93/- instead gives Rs 61.69545/-, short of Rs 61.70/- by Rs 0.00455/-. So the relationship holds to the paisa and not exactly, and step five says so wherever it prints a carried figure. Half a paisa on one unit is nothing anybody would notice; half a paisa printed as an exact equality is a reader taught to stop checking.
The put premium this record carries at Rs 2,000.00/- is Rs 57.93/-, already rounded. Carried for one year at 6.50 per cent, what may be written down?
Why do the spot, the level and the exposure all read Rs 2,000.00/-?
Three separate quantities in this guide carry the figure Rs 2,000.00/-, and a reader is entitled to wonder whether one of them was copied into the other two. None was. The spot price of the reference asset is Rs 2,000.00/-. The one level in this record that carries premiums is also Rs 2,000.00/-. The level matches the spot because that pair of contracts is struck at the money, and struck at the money means precisely that. And the exposureThe value of the reference asset a contract is written on. Exposure is not an amount anybody has paid and it does not change hands. on one unit is Rs 2,000.00/- as well. Exposure is the value of the reference asset a contract is written on, the same price seen a third way.
Two of those three agree because a level was chosen to match a price, and the third agrees because it is that price wearing a different name. Keep them apart in the working anyway. The spot is what the reference asset trades at now. The level is a term inside a contract. The exposure is a quantity, and nobody has paid it, posted it or received it. A sheet that writes Rs 2,000.00/- three times without saying which is which invites the reader to add two of them together. The arithmetic is fine, so nobody catches the mistake.
What does the last step mark, and why is it a step rather than a note?
Step six is the one that refuses, and it is a step because a note gets skipped. Write down, in the same place as the arithmetic and in the same size type, every figure this assembly needs that is not to hand, and what each one would require. Not at the foot of the sheet. Not in smaller text. In the table, on a line of its own, in the column where the number would have gone.
Here is that table for the assembly worked through above. Three kinds of entry come up again and again, and all three are on it.
| What is missing | Where it would go | What producing it would need |
|---|---|---|
| Premium at Rs 1,600.00/- | net premium, row 1 | a figure for how far the reference asset might move |
| Premium at Rs 1,800.00/- | net premium, row 2 | a figure for how far the reference asset might move |
| Premium at Rs 2,200.00/- | net premium, row 3 | a figure for how far the reference asset might move |
| Premium at Rs 2,400.00/- | net premium, row 4 | a figure for how far the reference asset might move |
| Value of any leg before its end date | nowhere in this record | the same figure, and none exists in this record |
| Which price actually arrives | nowhere in this record | something no arithmetic supplies |
| Net premium | the cost line | cannot be added up, so nothing is written there |
The shape of that table is worth a moment. The gap table has the same columns as a table of results, the same borders and the same weight. A reader who scrolls past it sees a table where the numbers should be. The signal is much louder than a paragraph beginning with the words please note. And the last row is the one that does the real work: it says the net premium cannot be added up, so no profit exists anywhere in this working, rather than leaving a blank somebody will read as nil.
The third and fourth entries are the ones people leave off, so they are worth reading twice. The value of a leg before its end date is a price rather than a payoff, and prices are not produced by any step in this method. Which price actually arrives is not a gap in the arithmetic at all; it is a category of thing arithmetic does not produce. Writing both down keeps the boundary of the method visible to whoever picks the sheet up next, and that reader is generally not the person who filled it in.
Steps one to five have been run on an assembly and one premium was missing. What does step six require to be written down, and where?
The failure: running the first five steps and dropping the sixth
Somebody runs steps one to five carefully. Out comes a clean list of rows, a tidy set of four levels, an obligation sentence they can defend, and an exact payoff at seven prices. Step five stops because a premium is missing, so they leave the cost line empty and move on. Then they write up what they have. Everything ties. Every figure is arithmetic. And the one thing that never arrived is the only thing that would have told anybody what this assembly costs to put on.
The specific point, rather than a general caution: a missing premium does not make the rest of the working look wrong, it makes it look finished. There is no ragged edge. The payoff table is complete, correct and checkable at every price, and completeness in one column is exactly what stops anybody asking about the other one.
Who makes it: careful people, more often than careless ones. Careless working looks unfinished and gets sent back. Careful working looks done, and the sense of being done comes from the arithmetic that is present rather than from any check on the arithmetic that is absent. The people most at risk are the ones whose first five steps were flawless.
The cost of the mistake: an assembly presented as fully worked whose cost nobody knows, and a reader downstream who takes an empty cost cell for a cost of nil. The reader downstream then compares it with something else, or carries it into a summary, or quotes the payoff at Rs 2,000.00/- as though it were a profit. Not one of those is a reading error on their part. The sheet told them nothing was missing.
The fix is the sixth step, run as a step. Give the gap a line in the same table, in the same size type, in the column where the figure would have been, and write beside it what producing it would need. Writing that line is the whole remedy, and it takes about ninety seconds.
What goes wrong when the steps are run out of order?
Three reversals come up constantly, and each has a consequence that can be stated flatly rather than a vague warning about rigour.
Drawing the shape first and writing the rows to match it reproduces the shape already expected. The name is doing the work. Once a picture exists, the rows get read against it, and a row that disagrees looks like a copying error rather than like information. Every check after that point is a check against a drawing rather than against a contract.
Costing before joining double counts a leg that step two would have struck out. In the six-row version above, a reader who added premiums before sorting would have counted a bought call at Rs 2,000.00/- and a written call at Rs 2,000.00/- that between them oblige nothing at any price. The payoffs genuinely cancel, so the payoff would still be right. The cost would not. The premiums do not cancel unless the two contracts were dealt at the same figure, and nothing says they were.
Running step four before step three produces a diagram nobody can explain. The obligation sentence is what a payoff diagram is a picture of, and without it the diagram is a set of points with a line through them. Somebody will ask what the flat stretch means, and the honest answer will be that it is where the arithmetic came out the same twice. Read it as its legs, in this order, every time, and the sixth step will have something to say about every assembly that ever turns up.
What goes wrong if the shape is drawn before the legs are written down?
How does somebody actually use these six steps on a position sheet?
The six steps are most useful when the working in hand was done by somebody else. An analyst checking a counterparty summary, a credit officer reading a collateral schedule, somebody at a household kitchen table reading a statement a relative has forwarded: all three are in the same position, holding a sheet of figures they did not produce. The method is a checking routine as much as a drafting one, and running it on somebody else's working takes about ten minutes and finds the same three things nearly every time.
- Count the rows before reading the name at the topA summary that names a position and shows three levels has given a shape and withheld a field. Count how many contracts it says are held, then count how many rows are shown. Where the two differ, something was tidied beforehand, and the rule that was used is not visible.
- Re-run the join yourself rather than accepting a netted summarySorting takes a minute on paper. A sheet that arrives already netted cannot be audited. Striking out under a rule and dropping a row by feel produce the same looking output. Re-running it either confirms the level list or produces a different one, and both answers are worth having.
- Ask of every figure whether it is a payoff or a profit, cell by cellNot column by column and not once at the top. Two quantities that differ by the carried net premium look identical in a spreadsheet, and the label almost never travels with the number when somebody copies it into a note.
- Find the cost line and decide which of three things it isA figure, an explicit nil, or a blank. A figure can be checked against the premiums. An explicit nil is a claim somebody made and can defend. A blank is the one to stop on. A blank means either the premiums were never gathered or the step was never run, and those are different problems.
- Ask which moment the working is forA payoff diagram describes the end date and nothing else. Where a sheet shows a shape and a date that are not the same date, the shape is describing a moment that has not arrived, and the legs still running have a price rather than a payoff. That is a question, not an error, and asking it early saves reworking the whole sheet later.
Notice what none of those five is. None asks whether the position is a good one to hold, none compares it with anything, and none produces a view on where the reference asset is going. The five are checks on whether a description is complete and correctly labelled. Checking is a smaller job than it sounds and a much more useful one than it looks.
The method takes apart an assembly nobody has seen before. Does it say whether to hold it?
Should a reader who can now do this take one on?
The six steps do not answer that, and the reason lies in what they produce rather than in caution. The method produces an obligation and a shape, and neither of those is a reason to take one on. Nothing in the six steps estimates a chance. Nothing in them ranks one assembly against another. No step could be run harder or longer to produce an answer. The answer is not the kind of thing this arithmetic makes.
Three things would have to be known before anybody could answer it, and not one of them is settled here. A view on how far the reference asset might move and how likely each move is, and the record holds no figure for either. The reader's own circumstances, unknowable to any author. And what the assembly costs to place, to hold and to unwind, exactly where step five stopped.
So what have the six steps handed over? A way of writing any option position down so that its obligation can be read off the contracts rather than off its name. A rule for joining that anybody can re-run and check. A fixed set of prices at which the payoff settles the whole shape. A costing step that either produces a profit or refuses to. And a last step that leaves a written record of what nobody could reach, the part that survives being read by somebody who was not there when the working was done.
What is set by an authority, and is not written out here
Four requirements sit under this method, and every value for them is set elsewhere. The size of one contract, meaning what it covers and in what quantity, is set by the Securities and Exchange Board of India (SEBI) at sebi.gov.in. The levels at which contracts are made available, and the spacing between them, are set by the same authority at the same site, and the four declared levels used above are working figures chosen at ten and twenty per cent either side of the spot rather than levels read off any venue. The procedure by which a writer is assigned against an exercised right is set there too. So is the collateral required where several legs are held together, and that is the row a reader looks for at exactly the point where step five stops. Where the reference is a rate or a currency, the equivalent arrangements sit with the Reserve Bank of India at rbi.org.in. Each of these moves, so a printed copy would be wrong rather than merely out of date the day it changed.
References
| Source | Document | Where |
|---|---|---|
| Securities and Exchange Board of India | Framework for what one contract covers and in what quantity, for the levels at which contracts are made available and the spacing between them, for the procedure by which a writer is assigned against an exercised right, and for the collateral required where several legs are held together. Four rows above, and the collateral row sits at the step where a reader expects a number | sebi.gov.in |
| Reserve Bank of India | The equivalent arrangements where the reference is a rate or a currency | rbi.org.in |
| International Organization of Securities Commissions | Where cross-border conduct principles sit | iosco.org |
| arXiv Quantitative Finance | Preprint repository consulted for the decomposition of multi-leg option positions into signed single-contract rows, for structure and notation only | arxiv.org |
| Social Science Research Network | Working paper repository consulted for the same material | ssrn.com |
The reference asset, its spot price of Rs 2,000.00/-, the financing cost of 6.50 per cent a year, the four declared levels and the assembly worked through above are invented.
Educational material. Not advice on any investment, tax, budget or market position.