Suppose a financial manager buys call options on 50,000 barrels of oil with an exercise price of

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Suppose a financial manager buys call options on 50,000 barrels of oil with an exercise price of \($15\) per barrel. She simultaneously sells a put option on 50,000 barrels of oil with the same exercise price of \($15\) per barrel. Consider her gains and losses if oil prices are \($10,\) \($12,$15,\) \($18,\) and \($20.\) What do you notice about the payoff profile?

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Fundamentals Of Corporate Finance

ISBN: 9780072313000

5th Edition

Authors: Stephen A Ross, Randolph W Westerfield

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