The following information is given about options on the stock of a certain company: S0= $20, X
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Question:
The following information is given about options on the stock of a certain company:
S0= $20, X =$20, r =5% (c.c.), T = 0.5 year,SD= 0.20
No dividends are expected. One option contract is for 100 shares of the stock. All notations are used in the same way as in the Black-Scholes-Merton Model.
Answer the following questions:
What is the costofwritinga covered call?
What will be the payoff and profit of the protective put if the stock price on maturity is $16,$18, $20,$22,or $24?
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