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Bullish ZEBRA example

How does bullish zebra example express a stock-like bullish exposure with engineered extrinsic cost view?

One concept per page · original written lesson · 547 prose words · authored, not installed or production-approved

What you will learn and prerequisites

Read first: Read a contract and its premium, Rights, obligations and expiration, Defined payoff risk is not margin, Read the whole multi-leg ticket

ZEBRA is an informal acronym for zero-extrinsic back ratio. A bullish example buys two in-the-money calls and sells a nearer-the-money call. The acronym describes an intended premium relationship, not a distinct exchange product.

Construction: read every leg

With stock 100, each 90 call at 11 has 10 intrinsic and one extrinsic. Two buy two extrinsic; selling the 100 call for two offsets it. The remaining 20-point debit is 2,000. Above 100 the net terminal slope is one contract; below 90 the entire debit can be lost.

Read the ticket before the graph

BUY means you own an option right; SELL means you accept a short-option obligation. Positive quantities are long and negative quantities are short in the calculation. Check quantity, call/put, strike, multiplier and expiry before netting premium.

All legs in this example share November 20, 2026 expiration. The entry observation is October 6, 2026, with fictional QLT at 100. These are independent illustrative premiums, not a current option chain or executable quotes. The terminal diagram assumes every leg and any shares are resolved at one common settlement price.

Before expiry: time and volatility

The Delta may resemble stock in a region, but Gamma and Vega do not disappear everywhere. Entry extrinsic cancellation is not a promise of exact 100-share Delta at all prices.

Manage the position deliberately

Compare debit, expiry, spreads and sensitivity with shares or a simpler call. Preserve the 2:−1 quantities. Recalculate extrinsic from actual quotes rather than trusting the name.

Fictional teaching ticket · no order submission

Bullish ZEBRA example

QLT • reference spot $100 • independent illustrative prices • quote date 2026-10-06

Read action, quantity, type, strike, expiry, premium and multiplier before the payoff
ActionQtyTypeStrikeExpiryPremium/unitMultiplier
BUY2Call902026-11-2011100
SELL1Call1002026-11-202100
Opening option cash (+received / −paid)-2,000 USD
Entry option fees in cost variant1.95 USD
Shares included0
Joint-terminal results—not a guarantee of interim cash requirements
MeasureBefore costsAfter stated entry fees
Maximum terminal profitUnbounded in this terminal modelUnbounded in this terminal model
Maximum terminal loss magnitude2,0002,001.95
Breakeven settlement price(s)100100.019

This is a mathematical expiry experiment using the displayed legs, not an executable quote. The slider range is not a risk limit.

$0.65 per option contract on entry only. No exit, assignment, financing or tax costs modeled.

Independent fictional premiums, not one simultaneous arbitrage-consistent chain. All legs realized simultaneously at intrinsic at the same expiry; terminal calculations do not model American early exercise, temporary unhedged positions, forced liquidation or live liquidity. Displayed chart domain is not a tail-risk cap.

From opening cash to a settlement result

Read the opening instructions: buy 2 90 call at 11.00; sell 1 100 call at 2.00. Option opening cash is $2,000.00 paid as a debit. A received credit is not earned profit while the obligation remains open.

Set the common settlement price to 95.00. Calls have intrinsic value max(S−K,0); puts have max(K−S,0). Subtract the opening premium from each intrinsic value, then multiply by signed quantity and the 100-unit multiplier. Shares contribute their price change from their own cost. The calculation popup shows every leg.

The combined result is $-1,000.00 before costs and $-1,001.95 after illustrative opening fees of $1.95. Exit fees, slippage, funding, dividends and taxes are not included. Opening fees are 0.65 per option contract, not a statement of any broker's pricing.

Maximum terminal profit is unbounded in this model; maximum terminal loss magnitude is $2,000.00, before costs. Isolated zero-P/L settlement points in the model: 100. Move the scenario slider across each strike and explain why the slope changes there. A strike is a contract threshold, not a prediction.

This terminal model is useful for comparing risk shapes, but actual American-style assignment, share delivery, forced liquidation or a failed multi-leg exit can produce a different path. A long protective leg is not an automatic instruction that a broker must exercise it when another leg is assigned.

Open the calculation without leaving this lesson

Calculate this exact ticket

Same-page calculation. Closing restores the lesson position and originating control.

P/L = Σ[q × multiplier × (intrinsic − opening premium)] + shares × (S−share entry) − costs

Intrinsic is nonnegative before the signed quantity is applied. This is a fictional terminal calculation.

  1. +2 × 100 × (5.00 − 11.00) = $-1,200.00: 90 call.
  2. -1 × 100 × (0.00 − 2.00) = $200.00: 100 call.
  3. Opening fees: 1.95.
Before costs $-1,000.00; after entry fees only $-1,001.95.

Maximum risk and breakevens

Same-page calculation. Closing restores the lesson position and originating control.

Evaluate S=0, all strikes and the final tail slope; solve P/L=0 on each linear segment.

Same-expiry payoffs are piecewise linear. A finite chart range cannot prove a tail is bounded.

  1. Maximum terminal profit is unbounded in this model; maximum terminal loss magnitude is $2,000.00, before costs.
  2. Breakeven points: 100.
  3. Costs shift net P/L downward without moving the strikes.
Maximum terminal profit is unbounded in this model; maximum terminal loss magnitude is $2,000.00, before costs.

The whole ticket at common expiry

Vertical: P/L per complete ticket (USD)
Horizontal: Underlying settlement price (USD)

The whole ticket at common expirySolid combined curve is before fees; the second includes only the stated entry fees. Individual-leg lines explain construction. This is terminal intrinsic P/L, not current option value. Price can move outside the displayed range. The complete numerical data are available below.-2,317.13-1,490.67-664.205162.255988.7151,815.1875839199107115
1. Combined terminal P/L before fees2. Combined terminal P/L after entry fees
Solid combined curve is before fees; the second includes only the stated entry fees. Individual-leg lines explain construction. This is terminal intrinsic P/L, not current option value. Price can move outside the displayed range.
See the individual legs behind the combined curveThe whole ticket at common expirySolid combined curve is before fees; the second includes only the stated entry fees. Individual-leg lines explain construction. This is terminal intrinsic P/L, not current option value. Price can move outside the displayed range. The complete numerical data are available below.-2,650-1,470-2908902,0703,25075839199107115
1. Combined terminal P/L before fees2. Combined terminal P/L after entry fees3. Leg 1: BUY 2 90 call4. Leg 2: SELL 1 100 call
Read the graph as a data table
Complete graph data; original fictional observations or model calculations
Underlying settlement price (USD)Combined terminal P/L before feesCombined terminal P/L after entry feesLeg 1: BUY 2 90 callLeg 2: SELL 1 100 call
75-2,000-2,001.95-2,200200
75.5-2,000-2,001.95-2,200200
76-2,000-2,001.95-2,200200
76.5-2,000-2,001.95-2,200200
77-2,000-2,001.95-2,200200
77.5-2,000-2,001.95-2,200200
78-2,000-2,001.95-2,200200
78.5-2,000-2,001.95-2,200200
79-2,000-2,001.95-2,200200
79.5-2,000-2,001.95-2,200200
80-2,000-2,001.95-2,200200
80.5-2,000-2,001.95-2,200200
81-2,000-2,001.95-2,200200
81.5-2,000-2,001.95-2,200200
82-2,000-2,001.95-2,200200
82.5-2,000-2,001.95-2,200200
83-2,000-2,001.95-2,200200
83.5-2,000-2,001.95-2,200200
84-2,000-2,001.95-2,200200
84.5-2,000-2,001.95-2,200200
85-2,000-2,001.95-2,200200
85.5-2,000-2,001.95-2,200200
86-2,000-2,001.95-2,200200
86.5-2,000-2,001.95-2,200200
87-2,000-2,001.95-2,200200
87.5-2,000-2,001.95-2,200200
88-2,000-2,001.95-2,200200
88.5-2,000-2,001.95-2,200200
89-2,000-2,001.95-2,200200
89.5-2,000-2,001.95-2,200200
90-2,000-2,001.95-2,200200
90.5-1,900-1,901.95-2,100200
91-1,800-1,801.95-2,000200
91.5-1,700-1,701.95-1,900200
92-1,600-1,601.95-1,800200
92.5-1,500-1,501.95-1,700200
93-1,400-1,401.95-1,600200
93.5-1,300-1,301.95-1,500200
94-1,200-1,201.95-1,400200
94.5-1,100-1,101.95-1,300200
95-1,000-1,001.95-1,200200
95.5-900-901.95-1,100200
96-800-801.95-1,000200
96.5-700-701.95-900200
97-600-601.95-800200
97.5-500-501.95-700200
98-400-401.95-600200
98.5-300-301.95-500200
99-200-201.95-400200
99.5-100-101.95-300200
1000-1.95-200200
100.55048.05-100150
10110098.050100
101.5150148.0510050
102200198.052000
102.5250248.05300-50
103300298.05400-100
103.5350348.05500-150
104400398.05600-200
104.5450448.05700-250
105500498.05800-300
105.5550548.05900-350
106600598.051,000-400
106.5650648.051,100-450
107700698.051,200-500
107.5750748.051,300-550
108800798.051,400-600
108.5850848.051,500-650
109900898.051,600-700
109.5950948.051,700-750
1101,000998.051,800-800
110.51,0501,048.051,900-850
1111,1001,098.052,000-900
111.51,1501,148.052,100-950
1121,2001,198.052,200-1,000
112.51,2501,248.052,300-1,050
1131,3001,298.052,400-1,100
113.51,3501,348.052,500-1,150
1141,4001,398.052,600-1,200
114.51,4501,448.052,700-1,250
1151,5001,498.052,800-1,300

The failure case

The stock falls below 90 and the 2,000 debit is lost. Eliminating entry extrinsic did not eliminate the intrinsic capital at risk.

Check your understanding

Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.

What is whole-position terminal P/L at QLT 95.00, before costs?

Reveal the worked answer

$-1,000.00

Use all signed legs, not just the winning leg. The popup and graph use the same ticket.

Critical risk question

Does a terminal loss bound guarantee every early-assignment or liquidation outcome?

Reveal the worked answer

No.

It describes the specified common-settlement payoff. Product rules, stock delivery, capital and execution still matter.

Takeaway

Explain the intended stock-like bullish exposure with engineered extrinsic cost exposure, each leg's obligation and the adverse price region before using the strategy name.

Sources, assumptions and downloadable script

External references support definitions and conventions. Worked scenarios and prose are original. No current quotes or dealer inventory are claimed.

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