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Daisy buys 1,000 shares of Royal Bank at $105 and immediately buys 10 puts with a strike price of $98 at a cost of $3.00.
Daisy buys 1,000 shares of Royal Bank at $105 and immediately buys 10 puts with a strike price of $98 at a cost of $3.00.
a) Explain why she would buy this option.
b) Is there any time value in this option? If so, what is it?
c) What is her total return if Royal shares hits $130.
d) What is her total return if Royal shares hit $90.
e) At what share price would Daisy breakeven.
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