Question
assume an investor constructs a portfolio by buying two shares of ABC stock at a Price of $35 per share, a put option with strike
assume an investor constructs a portfolio by buying two shares of ABC stock at a Price of $35 per share, a put option with strike price at $40 on this stock, and simultaneously selling a call option with strike price of $40 on this stock. the premium for the put option is $1 and the premium for the call option is $0.9. Each option is based on one ABC stock (not a bundle of 100) and each option has the same maturity date.
what is the profit/loss of this portfolio when the market price of ABC stock is $36.85 at the expiration of both options and you are liquidating the portfolio with no transaction costs
please retain at least 4 decimal points in your calculation and at least 2 decimal places in your final answer
the profit/loss of this portfolio is $___
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