Question
I have purchased 500 PFE stock at $25 each; I have also bought 3 put and 2 call option contracts on PFE stocks for $5.8
I have purchased 500 PFE stock at $25 each; I have also bought 3 put and 2 call option contracts on PFE stocks for $5.8 and $ 1.3 per share, respectively. Each option has an exercise price of $30 and expires in six months and each put/call option contract is for options on 100 shares of the stock. Develop a model to calculate (each position separately) the payoffs and profits for all the positions at the time of options expire if the price of PFE stock at that time is $40. Also show the payoff of the portfolio together. Make your model general so it can accommodate and calculate payoffs of different values of long/short positions in the stock, calls and puts.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started