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Donna Donie, an option analyst at UMB Students Managed Fund, believes that the market will be volatile in the near future, but Donie does not
Donna Donie, an option analyst at UMB Students Managed Fund, believes that the market will be volatile in the near future, but Donie does not feel particularly strongly about the direction of the movement. With this expectation, Donie decides to buy both a call and a put with the same exercise price and the same expiration on the the TRT stock trading at $ Donie buys one call option and one put option on TRT stock with the following exercise price of $ and the premiums.
Characteristic
Call Option Premium: $; Strike Price: $; Time to Expiration: days from
Put Option Premium:$; Strike Price: $; Time to Expiration: days from now
Donie determines the value at expiration and the profit under the following outcomes:
i The price of the stock at expiration is $ ii The price of the stock at expiration is $
CA At stock price $ the value and the profit are $ and $ respectively.
At stock price $ the value and the profit are $ and $ respectively.
B At stock price $ the value and the profit are $ and $ respectively.
At stock price $ the value and the profit are $ and $ respectively.
O C At stock price $ the value and the profit are $ and $ respectively.
At stock price $ the value and the profit are $ and $ respectively.
D At stock price $ the value and the profit are $ and $ respectively.
At stock price $ the value and the profit are $ and $ respectively.
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