Question
1.An investor purchased a call option for $2.00 two months ago that allows the investor to purchase one share at $30.The option is now about
1.An investor purchased a call option for $2.00 two months ago that allows the investor to purchase one share at $30.The option is now about to expire.
a.Construct a table of the investor's profit (loss) given the following stock prices at expiration:$10, 15, 20, 25, 30, 35, 40, 45, 50.
b.Now construct a table assuming the option had been a put option instead of a call option.
c.Graph the profit/loss schedules in parts (a) and (b).Indicate at what stock prices the investor would breakeven with both the call and put options.
d.If the investor had purchased both the call and the put, what type of strategy would they be using?
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