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6. [Chapter 20] Consider the following options portfolio. You write a January expiration call option on IBM with exercise price 130 and premium of $2.18.
6. [Chapter 20] Consider the following options portfolio. You write a January expiration call option on IBM with exercise price 130 and premium of $2.18. You write a January IBM put option with exercise price 125 and premium of $2.44. a. Graph the payoff of this portfolio at option expiration as a function of IBM's stock price at that time. b. What will be the profit/loss on this position if IBM is selling at 128 on the option expiration date? What if IBM is selling at 135 ? c. Ot what two stock prices will you just break even on your investment? d. What kind of "bet" is this investor making; that is, what must this investor believe about IBM's stock price to justify this position
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