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4. Writing Covered Call An investor initiates a strategy of writing covered calls. In the strategy, the investor sells a 2-year European call on a
4. Writing Covered Call
An investor initiates a strategy of writing covered calls. In the strategy, the investor sells a 2-year European call on a non-dividend-paying stock. The call has the strike price of $250 and currently sells for $20. Simultaneously, the investor buys the underlying stock that currently sells for $265. Find a range of stock prices in year 2 that result in a positive profit to the investors.
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