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Assume that a share of stock is currently selling for $80, that a call option can be purchased for an $8 premium and an exercise
Assume that a share of stock is currently selling for $80, that a call option can be purchased for an $8 premium and an exercise price of $80, and that a put option can be purchased for a $4 premium and an exercise price of $80. If the investor buys one share, one call, and one put option, what type of price movements will be desirable? Illustrate the investor's potential profits.
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