Straddle and strangle options

• The simultaneous buying or selling of two options (a call and a put).
• The strike price of the two options can be the same (straddle) or different (strangle).
• The seller wants to profit from the increase in volatility.
• The strategies theoretically offer infinite profit potential, while losses are limited (premium).
• In the case of a buying strategy, the main risk is the unchanged or slight change in the price of the base product.

Improved forward transaction (double KO forward)

A more favourable level than the forwards price can be achieved by assuming a certain knock-out level. An improved forwards transaction is a structure consisting of two options (one put and one call) with the same parameters (maturity, knock-out price level).

Range forwards (risk reversal)

In contrast to the pointlike form of the classic forwards price, it diverts the forwards price between two predetermined levels, in one range. Range forwards provide the future minimum and maximum exchange rates, and in the intermediate range, conversions can be made at the market price at maturity. A range forwards strategy with a knock-out level improves the price range available to the client.

• The strategy consists of a purchased/written put option and a written/purchased call option at a higher strike price.
• It can protect an investor who wants to protect against a fall in the price of one of their assets, such as a stock (purchased put and written call).
• The premium payable for the purchased option can be partially or completely offset by the premium received for the written option—the strategy can be concluded so that the fee for the purchased option is equal to the fee for the sold option.
  
  

Experts

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Useful documents

These documents in English language to the person concerned shall be for information purposes only. OTP Bank Plc shall fulfil its obligations imposed by the legal regulations or requirement of supervisory authority by the documents in Hungarian language.
In the event of any discrepancy between the English language and Hungarian language versions, the Hungarian language version shall prevail.

Information on the suspension of the market making obligation (available only in Hungarian)