Question
13. Stock ABC is trading at $51. Three-month calls with an exercise price of $55 are trading at $3.Three-month put options with an exercise price
13. Stock ABC is trading at $51. Three-month calls with an exercise price of $55 are trading at $3.Three-month put options with an exercise price of $45 are trading at $2.
a. If you sell both options, are you expecting the stock to be volatile over the next three months?
b. If you sell both options, what is the range of stock prices in which you make money?
c. What is your biggest risk if you sell both options?
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Basic Finance An Introduction to Financial Institutions Investments and Management
Authors: Herbert B. Mayo
10th edition
1111820635, 978-1111820633
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