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Suppose that you buy 4 put options with strike price $50 at $5 each, and sell...

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Finance

Suppose that you buy 4 put options with strike price $50 at $5each, and sell 5 call options with strike price $31 at $2.5each.
a) What is your profit if the stock price at maturity is $41?
b)What is your profit if the stock price at maturity is $52?
c) What is your profit if the stock price at maturity is $30?

Answer & Explanation Solved by verified expert
4.3 Ratings (943 Votes)
Working Premium received on call option 525 125 premium paid on put option 45 20 net premium 75 call option is an option to buy if price goes favorable that is the exercise price is    See Answer
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Transcribed Image Text

Suppose that you buy 4 put options with strike price $50 at $5each, and sell 5 call options with strike price $31 at $2.5each.a) What is your profit if the stock price at maturity is $41?b)What is your profit if the stock price at maturity is $52?c) What is your profit if the stock price at maturity is $30?

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