Question
As a trader, you become bullish on the Apple stock and decide to buy the following December call option on the stock: Strike price =
As a trader, you become bullish on the Apple stock and decide to buy the following December call option on the stock: Strike price = $200/Share; and Premium = $10/Share Suppose the size of the option is one share. Please answer the following questions:
1. Please fill out the blanks in the table Stock price at maturity 180 Exercise or not? Net profit (or payoff)
Stock price at maturity | Exercise or not? | Net profit (or pay off) |
180 | ||
190 | ||
200 | ||
210 | ||
220 | ||
230 |
2. Where is the break-even point?
3. strike price, the break-even point, and the moneyness (in the and out of the money) in the diagram. money, at the money, Please draw the payoff diagram to illustrate your payoff. Make sure to mark down the strike price, the break-even point, and the moneyness( in the money, at the money, and out of money ) in the diagram.
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