Question
A one-year call option on a stock with a strike price of $100 sells for $12.85, while the price of a one-year put option on
A one-year call option on a stock with a strike price of $100 sells for $12.85, while the price of a one-year put option on the stock with a strike price of $100 sells for $11.27. At the same time, a one-year call option on the same stock with a strike price of $85 sells for $21.43, while the price of a one-year put option on the stock with a strike price of $85 sells for $5.55. Suppose you bought 1 put option with strike price $100 and sold 1 put option with strike price $85. Ignoring all transaction costs (including the bid-ask spread), if the stock price on expiration date is $105.621, the profit on this options trading strategy would be? Select one: a. -6.53 b. -5.72 c. -3.68 d. -2.49 e. None of the options are correct.
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