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Suppose Stock D is currently selling for $100. Based on technical analysis, you believe that Stock D will be breaking far out of the range
Suppose Stock D is currently selling for $100. Based on technical analysis, you believe that Stock D will be breaking far out of the range in the coming few weeks. Option E Option F Option G Call Call Put Underlying Stock D Stock D Stock D Strike price $100 $125 $100 Premium $8 $3 $6 Expiry 15 Jun 11 15 Jun 11 15 Jun 11 (a) Name and describe the investment strategy that you will pursue. Construct a net payoff (profit & loss) diagram of your position. (8 marks) (b) What are the maximum gain and loss of your position as described in (1)? (3 marks) (c) What is the breakeven price of your position as described in (i)
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