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Farmer Donald bought a $1.70 strike put option for $0.11 and sold a $1.75 strike call option for a premium of $0.14. His total costs
Farmer Donald bought a $1.70 strike put option for $0.11 and sold a $1.75 strike call option for a premium of $0.14. His total costs are $1.65 per bushel and the continuously compounded risk-free interest rate is 7.84% over this period. What is the floor in his strategy assuming a 20,000-bushel crop?
a) $624
b) $1,624
c) $2,624
d) $3,624
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