Tutorial $2$

Consider the below profit$-$loss diagram for a put option holder

a$)$ What is the value of the exercise price?

b$)$ What is the value of the premium?

c$)$ What the value of the break$-$even stock price?

d$)$ What the value of the maximum profit?

A $6-$month call option on $100$ shares of ABC Corp. stock is selling for R$500.$ The strike price for the option is R$50.$ The stock is currently selling at R$28$ per share.

Ignoring transaction costs what price must the stock achieve to just cover the expense of the option?

If the stock price rises to R$60,$ what will the net profit on the option contract be$?$

$3.$ You buy one AME July $70$ call contract and one AME July $70$ put contract. The call premium is R$8$ and the put premium is R$5.$

a$)$ What is this strategy called?

b$)$ What is the profit or loss if the stock price for AME is currently R$20?$