Hi guys, I'm new to options and I am currently going through McMillan's book "Options as a Strategic Investment." In it, he says that the Reverse Straddle is an equivalent strategy to using Puts (haven't gotten there yet). He says that the maximum risk for a reverse hedge (reverse straddle strategy) is = (striking price - stock price) x round lots shorted + number of calls bought x call price. The upside breakeven = strike price + maximum risk/(number of calls bought - number of round lots short) The downside break-even = strike price - (maximum risk/(number of round lots short)) a.) First, the round lots shorted is basically the number of shares shorted in 100-share increments, right? b.) How does McMillan come up with these equations? I tried deriving them myself by thinking about them, but got stuck. c.) Suppose I wanted to make the strategy market neutral, in that my upside and downside break-even are equal (i.e. there is no skewness in the strategy, it is perfectly symmetrical in terms of direction).' The way I would go about doing that is by discovering the ratio of calls bought to lots short right? setting: -(-(maximum risk)/number of lots short) = maximum risk/(number of lots short) = maximum risk/(number of calls bought together - number of lots short) Then I multiply both side by (number of calls bought - number of round lots short) and divide both side by max risk? So I get (number of calls bought - number of round lots short)/(number of round lots) = 1. This is equal to number of calls bought/number of round lots - 1 = 1 or calls bought/number of round lots = 2? Is this right or am I completely wrong? Thank you