Question
You purchase 300 shares of Microsoft stock at a price of $26.02 per share. You partially hedge your position by (1) writing one call option
You purchase 300 shares of Microsoft stock at a price of $26.02 per share. You partially hedge your position by (1) writing one call option with a strike price of $27.50 per share and (2) buying one put option with a strike price of $27.50. The premium for the call is $2.75 per share and the premium for the put is $5.35 per share.
a. How much would be your total profit or loss if the stock price expiration of options is $23.50 pershare? You sell all the stock at this time.
b. How much would be your total profit or loss if the stock price expiration of options is $35.50 pershare? You sell all the stock at this time.
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