Question
Dak is fairly certain that DCFT stock is going to stay relatively flat for the next several months. Thus, he implements a short straddle strategy.
Dak is fairly certain that DCFT stock is going to stay relatively flat for the next several months. Thus, he implements a short straddle strategy. DCFT is currently trading at $84/share, and he uses at-the-money options to implement his strategy. When he implements the strategy, $84 calls are selling for $5.02/share, and $84 puts are selling for $5.18/share. What is Dak's total profit or loss if DCFT is trading at $96.2 when the options expire (assume the options would be exercised if in-the-money)? Enter your answer without the dollar sign, and round to the nearest dollar.
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