4. Shares of ABC Ltd are currently traded at Rs .1770. A call option with a strike price of 1750 and expiring in 90 days is traded at Rs.60 while a put with same strike price and maturity is traded at Rs .25. Show the payoff profile of a long straddle position using these options assuming that the share price on expiry date falls in the range of 1550 to 1950 at intervals of Rs.50. Also show the payoff diagram.
4. Shares of ABC Ltd are currently traded at Rs .1770. A call option with a strike price of 1750 and expiring in 90 days is traded at Rs.60 while a put with same strike price and maturity is traded at Rs .25. Show the payoff profile of a long straddle position using these options assuming that the share price on expiry date falls in the range of 1550 to 1950 at intervals of Rs.50. Also show the payoff diagram.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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4. Shares of ABC Ltd are currently traded at Rs .1770. A call option with a strike price of 1750 and expiring in 90 days is traded at Rs.60 while a put with same strike price and maturity is traded at Rs .25. Show the payoff profile of a long straddle position using these options assuming that the share price on expiry date falls in the range of 1550 to 1950 at intervals of Rs.50. Also show the payoff diagram.
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