A stock price is $30. An investor buys one call option contract on the stock with a strike price of $28and sells a call option contract on the stock with a strike price of $27. The market prices of the options are $2 and $1.7, respectively. The options have the same maturity date. Describe the investor's position and the possible gain/loss he will get (taking into account the initial investment). Make a graph of your gain/loss.
A stock price is $30. An investor buys one call option contract on the stock with a strike price of $28and sells a call option contract on the stock with a strike price of $27. The market prices of the options are $2 and $1.7, respectively. The options have the same maturity date. Describe the investor's position and the possible gain/loss he will get (taking into account the initial investment). Make a graph of your gain/loss.
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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Transcribed Image Text:A stock price is $30. An investor buys one call option contract on the stock with a strike price of $28and sells a call option contract on the stock with a strike price of $27. The market
prices of the options are $2 and $1.7, respectively. The options have the same maturity date. Describe the investor's position and the possible gain/loss he will get (taking into
account the initial investment). Make a graph of your gain/loss.
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