Question
Consider the following information: Stock price is $ 10 5 .00 Exercise price ( E ) is $ 9 5.00 Put price is $ 5
Consider the following information:
Stock price is $105.00
Exercise price (E) is $95.00
Put price is $5.00
Do this exercise on a per share basis, i.e., do not assume 100 shares per contract.
What is the profit profile on a hedge where the investor shorts 1share and writes 2 puts?
Do the algebra and diagram the profit potential
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Cornerstones of Financial and Managerial Accounting
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
2nd edition
978-0538473484, 538473487, 978-1111879044
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