Question
A call option on Tesla, Inc. (TSLA) stock with a strike price of USD 235 can be bought from or sold to Bank of America
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A call option on Tesla, Inc. (TSLA) stock with a strike price of USD 235 can be bought from or sold to Bank of America for USD 6. Curiously, an FB call with the same maturity but with a strike price of USD 245 can be bought from or sold to HSBC for USD 6. If you plan to hold the options to maturity:
(a) Devise a zero-net-investment arbitrage strategy (you use the premium from selling one option to buy the other) to exploit the pricing anomaly.
(b) Draw the payoff diagram for your position at maturity. (c) What is the name of your position?
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A Reformulation Of Keynesian Economics
Authors: Jagdish Handa
1st Edition
9814616095,9814616117
