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Getting Clever with Options Hannah owns one share of IBM stock which is currently trading at $150. She thinks that IBM stock will appreciate over
Getting Clever with Options Hannah owns one share of IBM stock which is currently trading at $150. She thinks that IBM stock will appreciate over the next year, but thinks long and hard about how to protect herself from possible losses. Hannah decides to write a one-year call option on IBM stock with a strike price of $165, which she sells for a $10 premium. She immediately uses the $10 to purchase a one-year put option on IBM stock with a strike price of $150. Plot the profit of this strategy, including the stock value and options, as a function of the IBM stock price in one year. Qualitatively, what is Hannah accomplishing with this strategy? What are its pros and cons? * This is in fact a specific example of a general options strategy. You might be interested in doing some research and figuring out which one it is
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