2. C. Compute profits and losses per share, and graph them against stock prices for the strategy of buying a share of Lotus's common stock at $55 per share and holding it until February 19, 1994. Study the graph created in your answer to question 1. Which of the various strategies examined offers the greatest upside return? The least upside return? The greatest downside potential? The least downside potential? Which is likely to produce better investment returns more often? In your opinion, which strategy is the most aggressive? Which is the most conservative? In general, are investment strategies involving options risky or safe?
import matplotlib.pyplot as plt
# Stock prices at expiration
stock_prices = [45, 50, 55, 60, 65]
# Profit/Loss calculations
profits_losses = [price - 55 for price in stock_prices]
# Plotting the graph
plt.figure(figsize=(10, 6))
plt.plot(stock_prices, profits_losses, marker='o', linestyle='-', color='b', label='Buy and Hold Stock')
# Adding labels and title
plt.xlabel('Stock Price at Expiration ($)')
plt.ylabel('Profit/Loss per Share ($)')
plt.title('Profit/Loss for Buying and Holding Lotus Stock')
plt.axhline(0, color='gray', linewidth=0.5)
plt.axvline(55, color='gray', linewidth=0.5, linestyle='--')
plt.legend()
plt.grid(True)
# Show the plot
plt.show()
------
import matplotlib.pyplot as plt
# Stock prices at expiration
stock_prices = [45, 50, 55, 60, 65]
# Profit/Loss calculations
profits_losses = [price - 55 for price in stock_prices]
# Plotting the graph
plt.figure(figsize=(10, 6))
plt.plot(stock_prices, profits_losses, marker='o', linestyle='-', color='b', label='Buy and Hold Stock')
# Adding labels and title
plt.xlabel('Stock Price at Expiration ($)')
plt.ylabel('Profit/Loss per Share ($)')
plt.title('Profit/Loss for Buying and Holding Lotus Stock')
plt.axhline(0, color='gray', linewidth=0.5)
plt.axvline(55, color='gray', linewidth=0.5, linestyle='--')
plt.legend()
plt.grid(True)
# Show the plot
plt.show()
please input the graph and help me answer the question
Step by step
Solved in 2 steps
