Question
You buy one ABC August 60 European call contract and one ABC August 60 European put contract. The call premium is $5.35 per share and
You buy one ABC August 60 European call contract and one ABC August 60 European put contract. The call premium is $5.35 per share and the put premium is $2.15 per share. Your strategy will be profitable if you believe that the stock price __________. (Hint: Think about what must happen to stock price for this options position to be profitable. Recall profit of an options position should be analyzed as the sum of profits of individual options that make up the position.) a. will be lower than $52.50 in August b. will be between $52.50 and $67.50 in August c. will be higher than $67.50 in August d. either a. or c.
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