Question
In June 2003, an investor is convinced that the SUPER BIO share price will be at least $60 on the third Friday of October
In June 2003, an investor is convinced that the SUPER BIO share price will be at least $60 on the third Friday of October 2003. To take advantage of this situation, while reducing his risk, he decides to execute the following spread: Purchase of twenty call option contracts October 2003/$60 at $8.25 and sale of twenty option contracts purchase October 2003/$70 at $3.50. Determine the maximum gain he can make and the maximum loss he can incur. (Show the results on a diagram).
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
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1305968352, 978-1337635653, 978-1305968356
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