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You buy a share of stock, write a one-year call option with X = $10, and buy a one-year put option with X = $10.
You buy a share of stock, write a one-year call option with X = $10, and buy a one-year put option with X = $10. What is the payoff of your
portfolio?
Position | ST<10 | ST>10 |
Buy Stock | (a) | (b) |
Short Call | (c) | (d) |
Long Put | (e) | (f) |
Total | (g) | (g) |
(Please explain thoroughly, thank you)
Multiple choice
(a) ST; (b) ST; (c) 0;(d) 0; (e) 0; (f) 0; (g) ST; (h) ST
(a) ST; (b) ST; (c) 0; (d) -(ST-10); (e) 10-ST; (f) 0; (g) 10; (h) 10
(a) ST; (b) ST; (c) 0; (d) 10-ST; (e) -(ST-10); (f) 0; (g) 10; (h) 10
(a) 0; (b) ST; (c) 0; (d) -(ST-10); (e) 0; (f) ST-10; (g) 0; (h) 10
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