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Question
a put and a call have the following terms:
call: strike price $30
term three months
price $3
put: strike price $30
term three months
price $4
the price of the stock is currently $29. you sell the stock short and purchase the call. complete the following table and answer the questions.
price of profit on profit on net profit
the stock stock put
$20
25
30
35
40
a. what is the maximum possible profit on the position?
b. what is the maximum possible loss on the position?
c. what is the range of stock prices that generates a profit?
d. what advantage does this position offer?
Answer
This answer is hidden. It contains 465 characters.
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