Question
A has been trading in a narrow range around $50 per share for months, and you think it will stay in that range for the
A has been trading in a narrow range around $50 per share for months, and you think it will stay in that range for the next two months. The price of a 2-month put option with an exercise price of $50 is $4 while the price of a 2-month call option with an exercise price of $50 is $5.
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What would be a profitable simple option strategy using a put and a call to exploit your belief about the stock future price level?
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How far can the stock price move in either direction before you lose money?
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Handbook Of Financial Risk Management
Authors: Thierry Roncalli
1st Edition
1138501875, 978-1138501874
