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Sara bought a straddle on Brent with the following characteristics: exercise price = $5, premium of call = $1, and the premium of put is
Sara bought a straddle on Brent with the following characteristics: exercise price = $5, premium of call = $1, and the premium of put is $1.50. Which of the following is TRUE if at this moment the price of Brent is $5.50 per share?
a. | Both the call and the put are out-of-the-money | |
b. | The call is out-of-the-money and the put is in-the-money | |
c. | Both the call and the put are in-the-money | |
d. | The call is in-the-money and the put is out-of-the-money | |
e. | The call is in-the-money and the put is at-the-money |
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