I was curious if there was any references to replicating option strategies i.e. bull spread, bear spread, butterfly, strangle, straddle, etc...? Also what is the insight into replicating of these strategies. I know we would use a zero coupon bond and invest in a risky asset or something of that regard.

Any suggestions is greatly appreciated.


All these strategies can indeed be synthesised using simple instruments such as zero coupon bonds and European vanilla options (such as call and puts).

Some info can be found here http://www.investopedia.com/slide-show/options-strategies/... although many other sites can provide relevant information, e.g. this one http://optioncreator.com/long-butterfly, which along with providing a definition, lets you analyse the decomposition, payoff and price in a BS framework.

Never forget that Google is your friend.

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