Question
27. Look at the following information. (10 pts) Security Qty Bid Ask Invesco QQQ Trust ETF $399.81 $399.63 QQQ 14 JAN 2022 410 CALL 20
27. Look at the following information. (10 pts)
| Security | Qty | Bid | Ask |
| Invesco QQQ Trust ETF | $399.81 | $399.63 | |
| QQQ 14 JAN 2022 410 CALL | 20 | $0.07 | $0.10 |
| QQQ 14 JAN 2022 415 CALL | 20 | $0.01 | $0.04 |
| QQQ 14 JAN 2022 390 PUT | 20 | $0.35 | $0.36 |
| QQQ 14 JAN 2022 385 PUT | 20 | $0.17 | $0.19 |
a. If you decide to enter into iron condor spread, how would it be structured, and what would the potential profit or loss be?
b. What is the spread's profit-to-loss ratio?
c. How much margin (buying power) does this position require?
d. What are the breakeven points?
e. If the QQQ monthly historic volatility is 2.65%, what is the expected return of this spread?
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Managerial Accounting
Authors: Ray Garrison, Eric Noreen and Peter Brewer
14th edition
978-007811100, 78111005, 978-0078111006
