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You Are Given The Following Price of The Stock 18 Price

This document provides information about stock and call option prices to calculate profit and loss for different option trading strategies if the stock price is $14, $20, or $25 at expiration. It gives the stock price as $18 and call option prices for strike prices of $15 and $20, then asks to calculate P/L for strategies of buying one option and selling the other, and compares those strategies to shorting or buying the stock.

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Muhammad Shahid
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45 views1 page

You Are Given The Following Price of The Stock 18 Price

This document provides information about stock and call option prices to calculate profit and loss for different option trading strategies if the stock price is $14, $20, or $25 at expiration. It gives the stock price as $18 and call option prices for strike prices of $15 and $20, then asks to calculate P/L for strategies of buying one option and selling the other, and compares those strategies to shorting or buying the stock.

Uploaded by

Muhammad Shahid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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You are given the following Price of the stock 18 Price

#6164
You are given the following:Price of the stock ....................................... $18Price of a three-
month call at $20 ..................... 2Price of a three-month call at $15 .................... 5a) What is the
profit (loss) at the expiration date of the options if the price of the stock is $14, $20, or $25 and if
the investor buys the option with the $20 strike price and sells the other option?b) Compare the
profit (loss) from this strategy with shorting the stock at $18.c) What is the profit (loss) at the
expiration date of the options if the price of the stock is $14, $20, or $25 and if the investor buys
the option with the $15 strike price and sells the other option?d) Compare the profit (loss) from
this strategy with buying the stock at $18.View Solution:
You are given the following Price of the stock 18 Price

ANSWER
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