The investment management department of your company has asked you to construct a speculative trading strategy using options. You have been asked to invest £100,000 in options trading strategy for a non-bank, non-insurance company’s shares for period between 26th February 2021 and 16th April 2020 (inclusive). 3 parts Report a) For the company whose shares are to be the underlying for your options, set up an options-based trading strategy given your view of: • the company • current market sentiment regarding the segment in which it operates • likely market movements over the period. You must support your analysis using real market data (suitably evidenced) as well as suitable academic literature covering analysis methods such as, for instance, economic, fundamental, technical etc.department. b) What is the annualised return that you are targeting based on your approach? Assess the risk that your strategy will not produce the returns you have anticipated. You must also assess the risks that the use of an options derivative instrument has introduced to the investment management department. c) Report on the actual profit and loss of your strategy over the period and analyse its actual performance relative to its forecast performance and analyse why your strategy achieved the results observed. (Further details in the assignment brief attached) Referencing: APA style referencing Number of references 10 Some PP slides on the topics of option strategies are attached and would be helpful.
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