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.
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