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Question 1 An investor plans to purchase 1,000 shares of STX Communications. At the same time, the investor plans to establish a long position in
Question 1 An investor plans to purchase 1,000 shares of STX Communications. At the same time, the investor plans to establish a long position in 10 put option contracts on STX and a short position in 10 call option contracts on STXThe current price of one share is S50. The put options have an exercise price of S40, a maturity of 6 months, and are priced at S0.283 per option. The call options have an exercise price of $70, a maturity of 6 months, and are priced at S0.162 per option. Answer the following questions. A. Complete the following table. For the purpose of filling in the table, assume one share of stock, one put option, and one call option. Expiration (T) Position Now (0) Net B. Compute the maximum gain, maximum loss and breakeven price for the strategy. The maximum gain and loss should be based on 1,000 shares, 10 put contacts, and 10 call contracts. Question 1 An investor plans to purchase 1,000 shares of STX Communications. At the same time, the investor plans to establish a long position in 10 put option contracts on STX and a short position in 10 call option contracts on STXThe current price of one share is S50. The put options have an exercise price of S40, a maturity of 6 months, and are priced at S0.283 per option. The call options have an exercise price of $70, a maturity of 6 months, and are priced at S0.162 per option. Answer the following questions. A. Complete the following table. For the purpose of filling in the table, assume one share of stock, one put option, and one call option. Expiration (T) Position Now (0) Net B. Compute the maximum gain, maximum loss and breakeven price for the strategy. The maximum gain and loss should be based on 1,000 shares, 10 put contacts, and 10 call contracts
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