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Compute net profits and losses per share (actual dollar profits and losses, not rates or return) at expiration (February 19, 1994) for the following investment
Compute net profits and losses per share (actual dollar profits and losses, not rates or return) at expiration (February 19, 1994) for the following investment strategies. Assuming you are using 10 contracts: Buying a call option on Lotus's stock; Writing a call option on Lotus's common stock; Buying a put option on Lotus's common stock; Writing a put option on Lotus's common stock. Hint: Start by calculating the profit or loss per share assuming that, by February 19, 1994, Lotus's common stock is selling at, say, $60 per share. Repeat this calculation for several other possible stock prices at the time of expiration that span a wide range above, below and at the exercise price of $55 per share (e.g., $45, $50, $55, $65, and so on)
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