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The price of a stock is $40. The price of a one-year European put option on the stock with a strike price of $30 is
The price of a stock is $40. The price of a one-year European put option on the stock with a strike price of $30 is quoted as $7 and the price of a one-year European call option on the stock with a strike price of $50 is quoted as $5. Suppose that an investor buys 10 shares, shorts 15 call options, and buys 15 put options. Draw a diagram illustrating how the investors profit or loss varies with the stock price over the next year
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