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The current price of a stock is $82. The following options are available on the stock. All the options mature in one year. X=Strike Price.
The current price of a stock is $82. The following options are available on the stock. All the options mature in one year. X=Strike Price. P=Premium. A. Call Option. X=80. Price=$4. B. Put Option. X=80. Price=$3. C. Call Option. X=90. Price=$2. D. Put Option. X=70. Price=$1. Use the options above to construct a Long Straddle. Draw the profit line for your trading strategy. Include break-even price(s) and the maximum gains and losses for your strategy. Discuss when it makes sense to use this strategy.
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