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' Consider a stock priced at $30. There are put and call options available at exercise prices of $30. The calls are priced at $2.90
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Consider a stock priced at $30. There are put and call options available at exercise prices of $30. The calls are priced at $2.90 and the puts cost $2.15. There are no dividends on the stock and the options are European-style. Assume that all figures are on a per share basis and there are no commissions. Use this information to answer questions 26 through 33. Suppose the investor constructed a covered call. At expiration the stock price is $27. What is the investor's total profit or loss? a. ($3.00) b. $(0.10) c. $2.90 d. $0.00 none of the above e. What is the breakeven stock price at expiration if you had bought the put? a. $27.85 b. $30.00 c. $32.15 d. $27.10 none of the above e. What is the maximum profit from the transaction described in problem #29 (short a naked call) if the position is held to expiration? (Ignore the $27 stock price at expiration). a. $32.89 b. $2.90 c. unlimited d. $27.10 none of the above e. What is the maximum loss from the transaction described in problem #29 if the position is held to expiration? (Ignore the $27 stock price at expiration). a. ($30.00) b. ($32.90) c. (27.10) d. unlimited e. none of the aboveStep by Step Solution
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