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An investor purchases one share of a stock for $40 and a put option for $1.5 with a strike price of $38. The investor sells
An investor purchases one share of a stock for $40 and a put option for $1.5 with a strike price of $38. The investor sells a call option for $2.5 with a strike price of $42. Both the put and call options expire on the same day in three months.
A) What is the net profit for the investor if the stock price is $50 on the option expiration date?
B) At what stock price on the expiration date will the investor just break even on her investment? Break even means net profit is zero.
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