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Draw the payoff and profits of this strategy: You establish a straddle on Walmart using September call and put options with a strike price of
- Draw the payoff and profits of this strategy:
- You establish a straddle on Walmart using September call and put options with a strike price of $50. The call premium is $4 and the put premium is $5. What are the breakeven points?
- You want to lower your total cost. Following the previous straddle strategy, additionally, you sold a $60 call for $2 premium and sold another $20 put for $1 premium. Draw the payoff and profit of this butterfly strategy. What are the breakeven points?
- Currently you long Walmart stock and the price is $50/share. You want to lock in your return for a month:
- You created a zero-collar strategy by shorting a call with a strike price of $52 for $1 premium and long a put with a strike price of $48 for $1 premium. Draw the pay off and profit of this strike. What are the worst los and the most gain you could have?
- You entered an equity swap as the part that will pay the total return of Walmart stock and will receive LIBOR rate (2% annually). Assume that you have 1 million dollars in Walmart. This month the return for Walmart is -5%. Show graphically how Equity SWAP works and how much money (in dollar amount) will you receive at the end of the month?
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