Draw a diagram showing the variation of an investor's profit and loss with the terminal stock price
Question:
Draw a diagram showing the variation of an investor's profit and loss with the terminal stock price for a portfolio consisting of:
(a) One share and a short position in one call option
(b) Two shares and a short position in one call option
(c) One share and a short position in two call options
(d) One share and a short position in four call options In each case, assume that the call option has an exercise price equal to the current stock price.
AppendixLO1
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