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Problem 2/ For risk management purposes, Madhawi decided to both own the stock and short a call on the stocks. She entered this position with
Problem 2/ For risk management purposes, Madhawi decided to both own the stock and short a call on the stocks. She entered this position with 19 contracts each containing 100 strategies. She bought the stocks initially for $ 23.5 per stock and sold the call for $ 12.75 with a strike price of $ 13.75. The expiration of the contract is within 2 months.
a/ What is the amount of his initial investment b/ What is his gain/loss if the stock price in 2 months is $ 18.5
c/ What is his maximum loss? d/ What is the breakeven price?
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