Identifier: C4T4L1 | Revision: 2026-10-26 | Planned study: 10–15 minutes, excluding extended practice.

Decision and objectives

Choose whether the method addresses this lesson’s task before placing an order. Objectives: 1. Compare exposure using common underlying units. 2. Reconcile complete synthetic ownership costs. 3. Choose an instrument for a stated loss and cash constraint.

Prerequisite: C4T3L5 and the completed earlier classes. Foundation: Stock Market School.

All numbers, quotes, contract terms and dates in the case are hypothetical teaching assumptions, not a listed series or offer. Unless varied below, options are European, expire together in 90 calendar days, are cash settled in TRY, and use 100 underlying units per contract. Premiums are TRY per underlying unit, paid at entry; signed quantities identify long (+) and short (−) legs. Assume no distributions and zero financing for the isolated payoff, no holiday adjustment, and final cash on the next business day. Actual tax is excluded, not assumed zero.

Mechanics

An equal contract multiplier does not create equal risk. Spot ownership has approximately one-for-one price exposure, a future has linear exposure and funding demands, and a long call has nonlinear exposure that can expire worthless. Compare the same underlying, horizon and terminal states before comparing percentage returns on initial cash. A small collateral deposit magnifies a futures percentage result without reducing its cash loss. A call’s premium is a purchase cost, while future collateral remains an asset subject to losses and restrictions.

Price and return drivers

Spot profit = units ×(exit − entry) minus costs and funding. Future profit uses the contracted entry price and multiplier, plus daily cash consequences not captured by the terminal equation. Call profit subtracts premium from its positive-only expiry payoff. The call’s initial delta is below one for a standard non-deep-in-the-money series, so one100-unit call does not initially hedge100 units of linear exposure. Exposure normalization and loss-budget normalization answer different questions.

Worked case

Compare hypothetical S100, future entry100, and long call K100 premium6, each referencing100 units for90 days. No distributions, cash settlement for derivatives, zero tax assumed only as an excluded unknown. Supply a synthetic12% simple annual funding/opportunity rate,90/360 day basis. Spot cash10000 has funding300; fees20 and custody10 make costs330. Future collateral2000 has funding60 and round-trip fees40 make100; terminal losses may need additional cash. Call premium600 has funding18 and total fees20 make38 beyond premium. At terminal120, net spot profit=2000−330=1670; future=2000−100=1900; call=2000−600−38=1362. Spreads are already incorporated in supplied purchase/exit prices; do not subtract them twice.

Adverse case

At expiry80,100,120 the spot results are−2330,−330,+1670; future−2100,−100,+1900; call−638,−638,+1362. These are hypothetical full-cost cash comparisons before actual tax, not forecasts. A future’s loss may exceed collateral before expiry; the terminal cost simplification does not model its margin path. Before expiry atS105, a supplied call bid7 gives net62 after original premium and total38 costs, while the expiry formula would imply a loss138. The two outcomes answer different exit dates.

Practical use

The worked ledger supplies all synthetic funding, fees and custody costs. Verify real daily margin cash for the future rather than borrowing the terminal-only funding simplification.

For any actual domestic implementation, verify the exact issue/contract, authorized intermediary, account permission and executable size. Include spread, commissions, passed-through fees, funding/borrow, custody and exercise/exit costs without double-counting embedded charges. Recheck income year, residency/status, issue/acquisition dates and effective tax law; all case results remain before actual tax.

Decision boundaries

A long call fits a finite paid-premium risk budget when expiry and cost are acceptable. Spot fits an ownership objective and avoids expiry, but commits more cash and retains share losses. A future fits a linear exposure only when cash resources survive margin stress. Decline the future if a TRY2000 collateral budget is incorrectly treated as a maximum loss. Decline all trades if the objective is certain nominal cash at a fixed date and none meets that obligation.

Practice and references

Exercise: retain100-unit exposure and the same costs but terminalS110. Solution: Spot net=1000−330=670; future=1000−100=900; call=1000−600−38=362. The future has the greatest terminal profit in these supplied terms, but that ranking does not establish suitability: its interim margin and downside remain linear.

Takeaway: Compare spot, futures and calls on common units and costs, then choose with the loss and funding constraints. Reference links: product card, formula; glossary: Linear exposure; Defined risk. Next: C4T4L2. Topic test.

Sources: Borsa Istanbul: Options (retrieved 2026-10-26; General information and basic concepts). Borsa Istanbul: Settlement Method (retrieved 2026-10-26; Settlement by contract family). Options Industry Council: All Strategies (retrieved 2026-10-26; Strategy descriptions). GIB: Provisional Article67 Guide for Individuals (retrieved 2026-10-26; Sections1,3–9 and19; publication introduction). Revision 2026-10-26; recheck changing terms before publication.

Shared reference guide