Question
A. Read the following excerpt and draw a profit diagram based on the option positions. Show all the critical points on the diagram. For example,
A. Read the following excerpt and draw a profit diagram based on the option positions. Show all the critical points on the diagram. For example, the intercepts on axes, maximum profit or/and maximum loss. B. Based on the profit diagram, briefly discuss the maximum profit, maximum loss and the traders market view. Options action on wireless carrier MetroPCS Communications suggests a change of heart for one investor who booked profits on a previously established bearish position The trader established a February risk reversal by selling 15,000 puts at the $5 strike spread against the purchase of the same number of calls at the higher $7.50 strike for a net cost of a nickel per contract. Note: The value of a nickel is 5 cents. One option contract trades 100 options.
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