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Homework Assigninent #6 Draw diagrams showing the variation of an invertor's profit and loss with the terminal stock price for a portfolio consisting of: (a)
Homework Assigninent #6 Draw diagrams showing the variation of an invertor's profit and loss with the terminal stock price for a portfolio consisting of: (a) One share of stock and a short position in one cell option (b) Two shares of shock and a short position in one call option (c) One share of shock and a short position in two call options (d) One share and a short position in four call options (e) One share of stock and a long position in two put options ( Long position in one call and a short position in one put In each case assume that the current stock price is $50, strike price for both the call and the put options are $50. Call premium is $5 and the put premium is $6. Sketch the net cashflows to appropriate positions. Create a separate graph for each portfolio
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