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Question 8 help Thanks tradig/F (p In October, an investor purchases an ABC 50 call with December expiration for $2.00/share. In November the share price
Question 8 help Thanks
tradig/F (p In October, an investor purchases an ABC 50 call with December expiration for $2.00/share. In November the share price of ABC stock increases. In November, ABC 50 calls are trading for $6.00, ABC 60 calls are trading for $1.00, and ABC 60 puts are trading for $3.00. Identify the follow-up strategy that could be taken in November that would provide constant profits if the stock price was between $50 and $60 at expiration, and would provide increasing profits if the stock fell below $50 or increased above $60 by -prtv Mor FetSiese 1,56Max (197 -1 expiration. a) Do nothing: Hold the original 50 call and make no further trades b) Liquidate: Sell the original 50 call and make no further trades c) Spread: Hold the original 50 call and sell a 60 call d) Roll-up: Sell the original 50 call and purchase multiple 60 calls ieation: Hold the original 50 call and purchase a 60 put a(45,) 319 tradig/F (p In October, an investor purchases an ABC 50 call with December expiration for $2.00/share. In November the share price of ABC stock increases. In November, ABC 50 calls are trading for $6.00, ABC 60 calls are trading for $1.00, and ABC 60 puts are trading for $3.00. Identify the follow-up strategy that could be taken in November that would provide constant profits if the stock price was between $50 and $60 at expiration, and would provide increasing profits if the stock fell below $50 or increased above $60 by -prtv Mor FetSiese 1,56Max (197 -1 expiration. a) Do nothing: Hold the original 50 call and make no further trades b) Liquidate: Sell the original 50 call and make no further trades c) Spread: Hold the original 50 call and sell a 60 call d) Roll-up: Sell the original 50 call and purchase multiple 60 calls ieation: Hold the original 50 call and purchase a 60 put a(45,) 319Step by Step Solution
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