Question 415 pts Consider the following options prices for a stock that currently has a price of 106

Consider the following options both expiring August of 2020, with ABC (currently trading at $106) as their underlying stock, currently with:

Call option with $105 strike, selling at a premium for $9.10 Put option with $105 strike, selling at a premium for $3.45 (Note: For partial credit, where applicable, type out the variables and their value. Equations aren't necessary)

A) Which option (the call or the put) is in-the-money?

B) For the call option, what is the intrinsic value and the time value?

C) If the contract size is 100, what is the maximum amount you could lose by writing one contract of puts. Consider the option premium in your calculation.

D) When the call option matures, at what stock price would the holder who purchased the option under current conditions end up breaking even?

E) Suppose you want to create a long straddle, what would you do? For what price(s) of the stock would you break even on this straddle strategy? (I suggest drawing a payoff diagram, starting with each leg, and then shift to draw a profit diagram to help you answer this question)

F) What do you want to happen if you invested in this straddle strategy?