Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A month ago, when RAPL was trading at $ 1 3 2 . 2 0 / share you thought that RAPL would would stay close

A month ago, when RAPL was trading at $132.20/share you thought that RAPL would would stay close to this price for the next month, so you created an option "short straddle" by:
selling 100 put options with a strike price of $132.00 when the option was quoted at $2.37
selling 100 call options with a strike price of $132.00 when the option was quoted at $2.45
The options expire today when the value of RAPL stock is now $142.90. Ignoring other trading costs and taxes, what is the net profit or loss on this straddle trade?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions

Question

1.who the father of Ayurveda? 2. Who the father of taxonomy?

Answered: 1 week ago

Question

Commen Name with scientific name Tiger - Wolf- Lion- Cat- Dog-

Answered: 1 week ago