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Calculate net pay-off Q6. Mr. John buys following options from stock exchange in order to reduce risk. Option Strike Price (Rs.) Nature of option Option

Calculate net pay-off

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Q6. Mr. John buys following options from stock exchange in order to reduce risk. Option Strike Price (Rs.) Nature of option Option Premium (Rs.) 4400 Call 400 W N 4000 Call 500 4600 Put 500 4 7500 Put 600 UI 4500 Put 500 Now he wants to know at which market price he will be at break even point in each of the above case. If market price in each case is Rs.7200, calculate his net pay-off in each case. Help him to find out the solution of both the above problems. Also explain him, how is future contract better than forward

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