Question 3

The following information is available on company ABC.

_{CALLS PUTS}

ABC X MAR APR MAY MAR APR MAY

119 120 6 8 11 1 3 4

119 125 2 5 8 2 4 6

119 130 1 3 6 5 7 9

You create a (long) straddle using the May maturity and the strike price of $120. What is the cash flow at maturity (CF_T) if the stock price of ABC at the May expiration is $122?

		None of these answers are correct
		+$100
		-$100
		+$300
		-$300