Question
A trader buys a call option with a strike price of $49 and a put option with a strike price of $49. Both options have
A trader buys a call option with a strike price of $49 and a put option with a strike price of $49. Both options have the same maturity. The call costs $3 and the put costs $4. Determine the traders profit/loss formula for the following asset price S and draw the profit/loss diagram.
- S < 49.
- 49 < S.
Thank you.
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International Financial Management
Authors: Cheol Eun
9th Edition
1260788865, 9781260788860
