Question
Need help with the steps. You currently own 200 shares of Abco Inc. stock which is trading for $50 per share. Youve made good money
Need help with the steps.
You currently own 200 shares of Abco Inc. stock which is trading for $50 per share. Youve made good money on this investment, which you would like to lock in should Abcos price drop to $48. But your investment in Abco has done so well that you are also concerned that it may become over-weighted in your portfolio, so you want to be able to liquidate your Abco position at a price rise of $57. a) You decide to use options to deliver the above outcomes (sell at $48 or sell at $57). Describe what types of option(s) (call and/or put) you need to buy and/or sell at what exercise prices to achieve this? b) If you can buy any option (call or put) for $4 and sell or write any option (call or put) for $3 (and ignoring the original cost of the stock), what is your profit or loss on the strategy in part a if: i) the stock price drops to $45 ii) the stock price rises to $60
dont need it anymore I got it
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