You own Verizon (VZ) stock which is trading at $35 and want to adjust your upside potential
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Question:
You own Verizon (VZ) stock which is trading at $35 and want to adjust your upside potential and downside risk. You decide to open a collar with a put strike of $30 and a call strike of $40. The put premium is $1 and the call premium is $2.
- Graph the profit diagram of the individual spot and option positions as well as the combined collar profit diagram.
- Identify your breakeven point(s).
- Identify your maximum gain and loss.
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