Question
Demarcus is fairly certain that DCFT stock is going to dramatically move in the near future, but he is not sure which direction. Thus, he
Demarcus is fairly certain that DCFT stock is going to dramatically move in the near future, but he is not sure which direction. Thus, he implements a long straddle strategy. DCFT is currently trading at $86/share, and he uses at-the-money options to implement his strategy. When he implements the strategy, $86 calls are selling for $9.89/share, and $86 puts are selling for $8.68/share. It turns out that he was right about the stock moving, and DCFT stock has increased substantially. What is Demarcus' total profit or loss if DCFT is trading at $116.73 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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