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The table below gives todays prices of one-year European call options written on a share of stock XYZ at different strike prices. Strike price and
The table below gives todays prices of one-year European call options written on a share of stock XYZ at different strike prices.
Strike price and call price respectively
X= 55, 9
Y =60, 4.5
Z= 65 , 1
In each of the following strategies provide 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.
a) A bear spread with strike prices of $55 and $60.
b) A position where you buy one $55 call and sell 2 $60 calls.
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