Question
The bid and ask prices of a put with strike price of $110.00 are $6.45 and $6.6, respectively. The bid and ask prices of a
The bid and ask prices of a put with strike price of $110.00 are $6.45 and $6.6, respectively. The bid and ask prices of a call with strike price of $110.00 on the same stock are $7.70 and 7.85, respectively. An investor believes that the price of the stock will be extremely volatile in the coming four months. She also estimates that the probability of the stock price going up is approximately three times as high as the probability of going down. Thus, she decides to construct a strap strategy with one share of the put and three shares of the call. The minimum profit of this strategy is______ Dollars. The break-even points of this strategy are $_____ , and $ ______. (Please answer all questions except multiple choice questions as numbers with two decimal places.)
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