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The table below gives today's prices of one-year European call options written on a share of stock XYZ at different strike prices. Strike Price ($)
The table below gives today's prices of one-year European call options written on a share of stock XYZ at different strike prices. Strike Price ($) Call Price ($) 50 11 60 5 70 1 In each of the following strategies, derive a table showing the relationship between profit and stock price at maturity as well as the range of stock prices at maturity for which the strategy is profitable. Explain your calculations. a) A bear spread with strike prices of $50 and $60. b) A portfolio where you buy one $50 call and sell two $60 calls. c) A portfolio where you buy one share of stock for $60 and sell one $70 call
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