Question
Question #5: Option Strategies [12 Points] Tracy just purchased 1300 shares of Heartland Express, Inc. (HTLD) stock at $16.93, and she has decided to write
Question #5: Option Strategies [12 Points] Tracy just purchased 1300 shares of Heartland Express, Inc. (HTLD) stock at $16.93, and she has decided to write calls against these stocks. Accordingly, she sells 13 HTLD call option contracts for $0.60 each. The expiration date on the calls is 6 months and they carry a strike price of $24.50. (a) What is the option strategy that Tracy has decided to employ? [2 Points] (b) What happens to Tracys total profit if the price of the stock falls to $13 a share? [4 Points] (c) What happens to Tracys total profit if the price of the stock rises to $30 a share? [4 Points] (d) What is the maximum total profit that Tracy can achieve with this strategy? [2 Points]
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