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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
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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