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A trader buys a put option with strike $ 8 5 and buys a call option with a strike of $ 9 5 , both

A trader buys a put option with strike $85 and buys a call option with a strike of $95, both with the same maturity T, with 2 months to expiration. The call option trades at $4 and the put option trades at $4.50. The current share price is $90. Assuming the trader holds this until maturity, to time t, which of the following describes the payoff profile of this options position?
Question 13Answer
a.
The maximum loss is $0.50, the maximum gain is $95 and break even is $90.50
b.
The maximum loss is unlimited, the maximum gain is $8.50, the breakeven price is $81.50
c.
The maximum loss is $8.50, the maximum gain is unlimited, there are breakeven points at $76.50 and $103.50
d.
The cost of this options position is $180, the stock must rise $4 or fall $4.50 in order to breakeven
e.
The maximum loss is $8.50, the maximum gain is $81.50, there are breakeven points at $76.50 and $103.50

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