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You want to buy AAPL stock (at the April 22 quoted price), however, you are aware that there is a potential for valuations to take
- You want to buy AAPL stock (at the April 22 quoted price), however, you are aware that there is a potential for valuations to take a nose dive if the reopening of the economy occurs prematurely. Your strategy is to buy 1,000 shares of AAPL at the 4/22 closing price, and buy 10 contracts on the July 260 put.
- What option strategy is this?
- Long straddle
- Solve for your profit (include the price you pay for AAPL stock) for the following AAPL stock prices at expiration: $225.00, $250.00, $275.00, $300.00, $325.00.
- Given the range of possible AAPL prices, what is the range of potential returns on this investment strategy?
- What is the range of potential returns on a similar strategy in which you buy the July 270 put, instead of the July 260 put?
- What option strategy is this?
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