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The following information is available on company ABC.
CALLS PUTS
ABC X MAR APR MAY MAR APR MAY
119 120 6 8 11 1 3 4
119 125 2 5 8 2 4 6
119 130 1 3 6 5 7 9
You write a covered call by buying 100 shares of stock and writing one May 120 call.
What equation best describes your profit at maturity?
| | | 100 [ST -120 Max(0, ST -120) + 11] |
| | | 100 [ST -119 Max(0, ST -120) + 11] |
| | | 100 [ST -120 Max(0, 120 - ST) + 11] |
| | | 100 [ST -119 Max(0, X - ST) + 11] |
| | | None of these accurately describes your profit equation |
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