Question
Given the following information for a call option Exercise price Premium Jan. 2021 April 2021 $40 $3.2 $3.6 $50 $3.0 $3.3 $60 $2.5 $2.8 Required
Given the following information for a call option
| Exercise price | Premium | |
| Jan. 2021 | April 2021 | |
| $40 | $3.2 | $3.6 |
| $50 | $3.0 | $3.3 |
| $60 | $2.5 | $2.8 |
Required
If an investor chooses to be buyer at $40 on Jan. 2021 and writer at $50 on Jan. 2021, calculate the net outcome for the investor if the market price on expiration date is $20, $40, and $70?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
