Question
Please answer the question stating first the needed formula to answer the question, and then show your work to get the answer. Please don't use
Please answer the question stating first the needed formula to answer the question, and then show your work to get the answer. Please don't use excel for the formula. Write out the formula in a word document. Thank you!
Crox Inc [CROX] is currently trading at $12.89. You know something unexpected is about to be announced with Crox, but you arent sure what. You decide that you want to initiate an option strategy called a straddle (combination of buying a call and buying a put with same strike price and strike date). You buy a call option with a strike price of $13 and a strike date of Dec 20, 2014 for $0.27, and you buy a put option with a strike price of $13 and a strike date of Dec 20, 2014 for $0.37.
If at expiration CROX is trading at $10, what was your return on investment?
a. -100%
b. -71.9%
c. 0%
d. 236.2%
e. 368.8%
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