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We consider the following options strategy on a stock and its total payoff at the expiry date of option #3. For the options with a
We consider the following options strategy on a stock and its total payoff at the expiry date of option #3.
For the options with a remaining life, we use BSM model to determine their values. We assume a volatility of 23% and a risk-free rate of 4%.
option | type | position | remaining life | strike |
1 | call | longx2 | 0.25 | 100 |
2 | call | shortx3 | 1 | 120 |
3 | call | longx1 | 0 | 140 |
Question: Use Excel to draw the payoff pattern for prices between $40 and $240 with a step of $10.
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