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A long straddle is constructed from a long European call with a premium of $ 1 3 and a long European put with a premium
A long straddle is constructed from a long European call with a premium of $ and a long European put with a premium of $ Both
options have the same maturity date and a strike of $ The current
stock price is also $ Derive mathematically and show graphically,
the boundaries of the region in which the straddle has negative profits
at expiry. Give an intuitive explanation of the answer you come up
with.
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