A call option with the strike price of ₹ 1900 costs ₹ 2.90 and a put option with strike price of ₹ 1850 costs ₹ 3.50 per share of Larsen and Tubro Ltd. Create a long strangle from these options. (Give the Table) What will be the profit pattern if the spot rate of the stock on expiration is 1400, 1450, 1550, 1600, 1650, 1750, 1850, 1950 per stock? (Lot size is 1000) Interpret the results by explaining characteristics of the strangle strategy. Also draw the diagram with proper labelling.
A call option with the strike price of ₹ 1900 costs ₹ 2.90 and a put option with strike price of ₹ 1850 costs ₹ 3.50 per share of Larsen and Tubro Ltd. Create a long strangle from these options. (Give the Table) What will be the profit pattern if the spot rate of the stock on expiration is 1400, 1450, 1550, 1600, 1650, 1750, 1850, 1950 per stock? (Lot size is 1000) Interpret the results by explaining characteristics of the strangle strategy. Also draw the diagram with proper labelling.
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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A call option with the strike price of ₹ 1900 costs ₹ 2.90 and a put option with strike price of ₹ 1850 costs ₹ 3.50 per share of Larsen and Tubro Ltd.
- Create a long strangle from these options. (Give the Table)
- What will be the profit pattern if the spot rate of the stock on expiration is 1400, 1450, 1550, 1600, 1650, 1750, 1850, 1950 per stock? (Lot size is 1000)
- Interpret the results by explaining characteristics of the strangle strategy.
- Also draw the diagram with proper labelling.
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