Question
5. The stock price of BAC is currently $120 and the call option with strike price of $120 is $5. A trader purchases 200 shares
5. The stock price of BAC is currently $120 and the call option with strike price of $120 is $5. A trader purchases 200 shares of BAC stock and short 2 contracts of call options with strike price of $120. 1 contract =100 shares (Please explain a little where the numbers are coming from) Thanks.
a. What is the maximum potential loss for the trader?
b. When the stock price is $130 and the call is exercised, what is the traders net profit?
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Real Estate Investment Strategies Structures Decisions
Authors: David Hartzell, Andrew E. Baum
2nd Edition
1119526094, 978-1119526094
