You own 100 shares of stock ABC，priced at $75. You want to
protect against a price...
90.2K
Verified Solution
Link Copied!
Question
Finance
You own 100 shares of stock ABC，priced at $75. You want toprotect against a price decline. You plan to hedge with an OPTION,having a Strike Price = 70 and a (per share) option price of $4.00( real position, the option, and overall outcomes）
a) Specify the option position, and Draw the 3 or 4 relevant“final graphsâ€
b) On the graphs, specify the $ outcomes if the ABC stockprice is $52, 72, 92 when the option expires.
Answer & Explanation
Solved by verified expert
4.4 Ratings (961 Votes)
100 Stocks of ABCPrice 75a To hedge against a price decline we should purchase a Putoption on the stock of ABCPurchasing a put option at a strike price of 70
See Answer
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
