Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 20 (1 point) Consider an investor who has a short/sell position in 3 call option contracts and long/buy position in 3 put option contracts
Question 20 (1 point) Consider an investor who has a short/sell position in 3 call option contracts and long/buy position in 3 put option contracts for firm ABC's stock. All options mature one year from now and have exercise price of $65 for call and $49 for put. The current stack price of firm ABC is $50. The cost of call option is $5.5 and put option is $9.5. Assume each option contract is written on 100 shares of firm ABC. One year later, the stock price of firm ABC becomes $54. What is the investor's total profit in a year from now? Enter your answer as a negative number if the company incurs a loss (e.g., if the company incurs a loss of $5,000, then write -5000 to indicate a profit of 5000). Round your answer to the nearest integer (i.e., zero decimal places) Your
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started