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Please construct profit diagrams, not profit tables. Thank you! 2 Options 2. Construct profit diagrams at expiration time to show what position in IBM puts,
Please construct profit diagrams, not profit tables. Thank you!
2 Options 2. Construct profit diagrams at expiration time to show what position in IBM puts, calls and/or underlying stock best expresses the investor's objectives described below. IBM currently sells for $200 so that profit diagrams between $150 and $250 in $10 increments are appropriate. Assume that at-the-money puts and calls currently cost $30 each. The call with strike $180 costs $45 and the call with strike $220 costs $20. (a) An investor wants to benefit from IBM price drops, but does not want to lose more than $30 on the investment. 1 (b) An investor wants to have a positive payoff if the the upcoming IBM earnings announcement is close to market expectationsmeaning that the price will not move by more than $20 dollars
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