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Tina sells short 1,000 shares of XYZ at $10 and immediately buys 10 calls with a strike price of $11.50 at a cost of $0.25.
Tina sells short 1,000 shares of XYZ at $10 and immediately buys 10 calls with a strike price of $11.50 at a cost of $0.25.
- What type of account would Tina need to have in order to make this type of trade?
- What does Tina believe the shares of XYZ are going to do?
- Why does she buy the calls?
- Discuss 2 risks of shorting shares.
- What is her total profit/loss if XYZ shares hit $12
- What is her total profit/loss if XYZ share hit $8
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