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A trader establishes an option-trading strategy as follows: One long call option with a strike price of $40, which has a premium of $4.20, One
A trader establishes an option-trading strategy as follows: One long call option with a strike price of $40, which has a premium of $4.20, One long put option with a strike price of $40, with a premium of $5.00, and Two short call options with a strike price of $45, each call having a premium of $2.80. The upfront cost to establish this strategy is Do not enter a +ve or -ve sign for this answer. Just enter the dollar amount. Do not enter the dollar sign ($). In the following questions, enter all answers to 2 decimal places. If the payoff is negative, be sure to enter the negative sign. Be careful to differentiate between gross payoffs and net payoffs. Do not enter dollar signs ($). If the underlying share price at expiry is $38: The gross payoff on the long $40 call option is The gross payoff on the long $40 put option is Taken together, the gross payoff to the two short $45 call options is The gross payoff to the option-trading strategy is If the underlying share price at expiry is $47: The gross payoff on the long $40 call option is The gross payoff on the long $40 put option is Taken together, the gross payoff on the two short $45 call options is Taking the upfront establishment cost into account, there are three breakeven points for this option-trading strategy. In the three boxes that follow, enter the breakeven points in order from lowest to highest: and Do not enter the dollar sign ($) anywhere in this
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