Answered step by step
Verified Expert Solution
Question
1 Approved Answer
5. Chipotle (CMG) is currently trading at $1167/ share. You heard someone say there was another e. coli outbreak at one of their restaurants. Hoping
5. Chipotle (CMG) is currently trading at $1167/ share. You heard someone say there was another e. coli outbreak at one of their restaurants. Hoping to make a quick profit you short a 2-day call option with a strike price of $1160 /share for a price of $13.00/ share. Assume a 3.5% interest rate per annum. ( 1 point) a) Draw a payoff and profit diagram of this position. Indicate your breakeven point. b) To your horror, over the next two days CMG jumps to $1175/ share. What is your total profit or loss? 5. Chipotle (CMG) is currently trading at $1167/ share. You heard someone say there was another e. coli outbreak at one of their restaurants. Hoping to make a quick profit you short a 2-day call option with a strike price of $1160 /share for a price of $13.00/ share. Assume a 3.5% interest rate per annum. ( 1 point) a) Draw a payoff and profit diagram of this position. Indicate your breakeven point. b) To your horror, over the next two days CMG jumps to $1175/ share. What is your total profit or loss
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started