A three-month call with a strike price of $25 costs $2. A three-month put with a strike price of $20 and costs $3. A trader uses the options to create a strangle. For what two values of ST does the trader breakeven with a profit of zero, where ST is the stock price in three months?..... And…. Select one: a. $30 and $35. b. $20 and $10. c. $10 and $25. d. $15 and $30.
A three-month call with a strike price of $25 costs $2. A three-month put with a strike price of $20 and costs $3. A trader uses the options to create a strangle. For what two values of ST does the trader breakeven with a profit of zero, where ST is the stock price in three months?..... And…. Select one: a. $30 and $35. b. $20 and $10. c. $10 and $25. d. $15 and $30.
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 three-month call with a strike price of $25 costs $2. A three-month put with a strike price of $20 and costs $3. A trader uses the options to create a strangle. For what two values of ST does the trader breakeven with a profit of zero, where ST is the stock price in three months?..... And…. Select one: a. $30 and $35. b. $20 and $10. c. $10 and $25. d. $15 and $30.
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