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Kelo Berhad is a large telecommunication firm whose stock has traditionally been trading in RM8.50 to RM9.50 range. The company currently is facing problems with

Kelo Berhad is a large telecommunication firm whose stock has traditionally been

trading in RM8.50 to RM9.50 range. The company currently is facing problems with

it illegal setup of communication tower in Sabah, thus instability on stock price will

occurred. There is likelihood that the company will be legally prosecuted.

With the following information;

RM9.50 call @ 0.35

RM8.50 put @ 0.45

(i) Outline the strategy and calculate the break-even point(s).

(ii) Draw a table and graph the position.

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