R/12_shortPutGraph.R

In bullishTrader: Bullish Trading Strategies Through Graphs

#'Calculates Profit and Loss (PnL) per share (or unit of the underlying) and Breakeven (BE) point at expiration for European Short Put and draws its graph in the Plots tab.
#'@description
#'Selling a put is a simple, short-term income strategy.  When you sell a put, you have sold you receive a put premium or put price and obligation to buy from put buyer. Trader or investors outlook is bullish and the expectation is that price will rise and will never be exercised (Kakushadze & Serur, 2018).
#'@details
#'This method is developed, and the given examples are created, to compute per share Profit and Loss at expiration and also the Breakeven (BE) point for a Short Put and draws its graph in the Plots tab.
#'@param ST Spot Price at time T.
#'@param X Strike Price or eXercise price.
#'@param P Put Premium received on sold Put.
#'@param hl lower bound value for setting lower limit of X axis displaying spot price.
#'@param hu upper bound value for setting upper limit of X axis displaying spot price.
#'@param xlab X axis label.
#'@param ylab Y axis label.
#'@param main Title of the Graph.
#'@param sub Subtitle of the Graph.
#'@return returns a profit and loss graph of Short Put.
#'@importFrom graphics abline
#'@importFrom graphics points
#'@importFrom graphics text
#'@importFrom graphics lines
#'@importFrom graphics par
#'@importFrom graphics plot
#'@importFrom graphics legend
#'@importFrom graphics axis
#'@author MaheshP Kumar, \email{maheshparamjitkumar@@gmail.com}
#'@references
#'Cohen, G. (2015). The Bible of Options Strategies (2nd ed.). Pearson Technology Group.\cr
#'Kakushadze, Z., & Serur, J. A. (2018, August 17). 151 Trading Strategies. Palgrave Macmillan. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3247865
#'@examples
#'shortPut(17,18,1.44)
#'shortPut(50,55,8,hl=0.7,hu=1.2)
#'shortPut(1000,1000,10,hl=0.97,hu=1.02)
#'@export
shortPut <- function (ST,X,P,hl=0,hu=1.5,xlab="Spot Price ($) on Expiration",ylab="Profit / Loss [ PnL ] at Expiration ($)",main="Short Put ", sub="bullishTrader / MaheshP Kumar"){
  myData <- data.frame (spot = c((ST*hl):(ST*hu)))
  myData$pl <- (-(pmax(0,(X-myData$spot))) + P)
  oldpar <- par(no.readonly = TRUE)
  on.exit(par(oldpar))
  myData$pl = round(myData$pl, digits=2)
  myData$spot = round(myData$spot, digits=2)
  par(mfrow = c(1,1), bg="azure1",las=1,mai=c(1.12, 0.92, 0.82, 0.82))
  plot(myData$spot, myData$pl, pch=21, bg="cyan1",col="cyan1", xlab = xlab, ylab = ylab,col.lab="springgreen4", cex.lab= 1.1, main = main,col.main="violetred", col.sub="lightsteelblue2", sub=sub,cex.sub=0.8,xaxt="n")
  text (myData$spot, myData$pl, labels = as.character(myData$pl), adj=-0.25,
        pos = NULL, offset = 0.3, vfont = NULL,
        cex = 0.5, col = "red", font = NULL )
  points(x=(X-P), y=0,cex = 2, pch = 23, col ="red",bg="gold")
  text((X-P),1, labels=(X-P), adj = 0.1,col="goldenrod3")
  abline(h = 0,col = "gray")
  abline(v = X,col = "gray",lty=5,lwd=1.25)
  legend("topleft", legend = c("PnL Point","BE Point"),text.col ="snow",  bg ="darkorchid4", pch=c(16,18), col=c("cyan1","gold"),cex = 1)
  lines(myData$spot,myData$pl,col = "blue")
  axis(4, at=myData$pl,labels=myData$pl, col.axis="red", las=2,cex.axis=0.8,col.ticks ="lightsteelblue2")
  axis(1, at=myData$spot,labels=myData$spot,col.axis="blue",las=1,cex.axis=0.7,col.ticks = "lavenderblush2")
}