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You stare at your computer screen and see that Apple's stock (AAPL) is currently trading at $24.68 (ask price) and $24.65 (bid price). You also
You stare at your computer screen and see that Apple's stock (AAPL) is currently trading at $24.68 (ask price) and $24.65 (bid price). You also have the following information on option prices with APPL as the underlying asset and all maturing in January: Consider the following trading strategies: A. Buy a call option with a strike of K=$25 and sell a put option with a strike of K=$25 B. Buy a call option with a strike of K=$25 and sell a call option with a strike of K=$27.5 C. Buy a put option with a strike of K=$25 and sell a put option with a strike of K=$22.5 Let ST denote the value of the underlying asset at maturity. ) For what values of ST does each trading strategy yield positive profits? Note that the question is about profits, not payoffs (that is, you need to factor in the cost of the trading strategy). (Write your final answers in dollars and round to two decimals: for instance, if the answer is $450.355 or $450.359, write 450.36 without the dollar sign; if the answer is $450.354 or $450.351, write 450.35 .) Strategy A is profitable if ST is (write "higher" or "lower") than \$ Strategy B is profitable if ST is (write "higher" or You stare at your computer screen and see that Apple's stock (AAPL) is currently trading at $24.68 (ask price) and $24.65 (bid price). You also have the following information on option prices with APPL as the underlying asset and all maturing in January: Consider the following trading strategies: A. Buy a call option with a strike of K=$25 and sell a put option with a strike of K=$25 B. Buy a call option with a strike of K=$25 and sell a call option with a strike of K=$27.5 C. Buy a put option with a strike of K=$25 and sell a put option with a strike of K=$22.5 Let ST denote the value of the underlying asset at maturity. ) For what values of ST does each trading strategy yield positive profits? Note that the question is about profits, not payoffs (that is, you need to factor in the cost of the trading strategy). (Write your final answers in dollars and round to two decimals: for instance, if the answer is $450.355 or $450.359, write 450.36 without the dollar sign; if the answer is $450.354 or $450.351, write 450.35 .) Strategy A is profitable if ST is (write "higher" or "lower") than \$ Strategy B is profitable if ST is (write "higher" or
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