Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Graph profit plots. Analyze and summerize your answers. Short Straddle @ $85 Straddle: An option strategy with which the investor holds a position in both

image text in transcribed Graph profit plots. Analyze and summerize your answers. Short Straddle @ \$85 Straddle: An option strategy with which the investor holds a position in both a call and put with same strike and expiration date. \begin{tabular}{|c|c|c|c|c|c|} \hline & Call & Put & & \\ \hline Strike Price & 85.00 & 85.00 & & \\ \hline Option Price & 28.25 & 0.25 & & \\ \hline Interest rate & 0.05 & & & \\ \hline & & & & \\ \hline Stock Price & Short Call & Short Put & Total Payoff & Profit \\ \hline 85.00 & & & & \\ \hline 90.00 & & & & \\ \hline 95.00 & & & & \\ \hline 100.00 & & & & \\ \hline 105.00 & & & & \\ \hline 110.00 & & & & \\ \hline 115.00 & & & & \\ \hline 120.00 & & & & \\ \hline 125.00 & & & & \\ \hline & & & & \\ \hline \end{tabular} Butterfly Spread with long call strike prices of \$95 and \$125 Butterfly Spread: Buying a call option with a relatively low strike price K1, buying a call option with a relatively high strike price K3, and selling two call options with a strike price K2 half way between two K1 and K3. \begin{tabular}{|c|c|c|c|c|c||c||} \hline & & & & \\ \hline & Call (K1) & Call (K2) & Call (K3) & & \\ \hline Strike Price & 95.00 & 110.00 & 125.00 & & \\ \hline Option Price & 20.13 & 7.63 & 2.31 & & \\ \hline interest rate & 0.05 & & & & \\ \hline & & & & \\ \hline Stock Price & Long Call (K1) & Long Call(K3) & Short 2 Calls(K2) & Total Payoff & Profit & \\ \hline 85.00 & & & & & \\ \hline 90.00 & & & & & \\ \hline 95.00 & & & & & \\ \hline 100.00 & & & & & \\ \hline 105.00 & & & & & \\ \hline 110.00 & & & & & \\ \hline 115.00 & & & & & \\ \hline 120.00 & & & & & \\ \hline 125.00 & & & & & \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Profit First For Lawn Care And Landscape Businesses

Authors: Christeen Era, Steven A Rigolosi, Mike Michalowicz

1st Edition

0578908158, 978-0578908151

More Books

Students also viewed these Finance questions