This paper circulates around the core theme of Construct a table of the investors profit (loss) given the following stock prices at expiration: $10, 15, 20, 25, 30, 35, 40, 45, 50. together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Question 1
a.Construct a table of the investors profit (loss) given the following stock prices at
expiration: $10, 15, 20, 25, 30, 35, 40, 45, 50.
.homeworkminutes.com/answer/view/71242#”>purchase
exercise
$2.00
$30.00
$45.00
$13.00
$50.00
$18.00
$45.00
$(2.00)
$50.00
$(2.00)
Answer
Stock Price
profit or Loss
$10.00
$(2.00)
$15.00
$(2.00)
$20.00
$(2.00)
$25.00
$(2.00)
$30.00
$(2.00)
$35.00
$3.00
$40.00
$8.00
b. Now construct a table assuming the option had been a put option instead of a call
option.
Answer
Stock Price
profit or Loss
$10.00
$18.00
$15.00
$13.00
$20.00
$8.00
$25.00
$3.00
$30.00
$(2.00)
$35.00
$(2.00)
$40.00
$(2.00)
c. Graph the profit/loss schedules in parts (a) and (b). Indicate at what stock
prices the investor would breakeven with both the call and put options.
Answer
Breackeven-Call&Put Opt ions
Row 6
Row 12
d. If the investor had purchased both the call and the put, what type of strategy would they
be using?
Answer
The type of strategy when investor purchasing a combination of a call and a put, each with
the same exercise price and expiration date called " Straddle"
