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Practical Application: Set up a 1 - for - 1 outperformance strategy in your account Stock A is trading at $ 7 5 . Stock
Practical Application: Set up a for outperformance strategy in your account
Stock A is trading at $ Stock B is trading at $ We think A is a better stock than B How can we profit from our view?
We will need Delta shares of # per share of # to set up the trade.
We # shares of A and # # shares of B
Based on this context, please answer the following three questions.
Scenario Good A goes up by while B goes up by
Our dollar gain on A is $
Our dollar loss on B is $
Our net gain is $ #
Scenario Good A goes down by while B goes down by
Our dollar loss on A is $
Our dollar gain on B is $
Our net gain is $ #
Scenario Bad A goes down by while B goes down by
Our dollar loss on A is $ #
Our dollar gain on B is $ #
Our net loss is $ #
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