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You are the financial manager of a construction company that wants to reduce the volatility of its cash flows by making its cash flows less
You are the financial manager of a construction company that wants to reduce the volatility of its cash flows by making its cash flows less sensitive to changes in the price of concrete. It will do so by buying a call option on the Invesco Materials ETF with a strike price of $65 and buying a put option on the ETF with a strike price of $55. Both options are European and expire in 3 months. Suppose 3 months from now the materials ETF trades at $50. What is the payoff of this option strategy? O $5 0 O $15 1
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