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Consider a call and a put option with prices of $4 and $2 respectively and the same strike price of K = $80. Both options
Consider a call and a put option with prices of $4 and $2 respectively and the same strike price of K = $80. Both options are written on the same underlying and have the same expiration date. A trader buys one call and one put. (This is known as a long straddle) (i) If ST > K, what is the stock price above which the trader makes a profit? (ii) If ST
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