Question
Hi, anyone can help me with these questions. Julian Lim purchased a put option at the cost of $0.30 each. The put option has a
Hi, anyone can help me with these questions.
Julian Lim purchased a put option at the cost of $0.30 each. The put option has a strike place of $3.00 and the underlying stock is currently trading at $3.50. Julian Lim bought 100 shares.
i) Determine the stock price that would allow Julian Lim to break even on his put option strategy.
ii) Calculate the maximum loss to be incurred by Julian Lim in this put option strategy.
iii) Calculate the maximum gain to be produced for Julian Lim by this put option strategy.
iv) Construct a profit/loss table and draw a graph for Julian Lim to show him the relationship between the profit/loss on this put option strategy to the underlying share price.
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