Question
Emily & Daughters Companys (EDC) stock is currently traded at $25.50 per share. The following European options on the stock are available: Options Strike Price
Emily & Daughters Companys (EDC) stock is currently traded at $25.50 per share. The following European options on the stock are available:
| Options | Strike Price | Premium | Maturity |
| Call | $27.50 | $2 | 1 year |
| Put | $23.50 | $4 | 1 year |
One of your investment specialists suggests you take the following position: sell one call option and buy one put option on EDC stock. Draw the profit diagram for this strategy, including labels on the diagram.
Given the strategy, what price movements would provide the most profit?
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Financial Statement Analysis
Authors: Charles H. Gibson
13th International Edition
1133189407, 9781133189404
