A share of ABC Corporation sells for $95. A call on the share with exercise price $90
Question:
A share of ABC Corporation sells for $95. A call on the share with exercise price
$90 sells for $8.
a. Graph the profit pattern from buying one share and one call on the share.
b. Graph the profit pattern from buying one share and two calls.
c. Consider the profit pattern from buying one share and N calls. At which share price do all the profit lines cross?
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