Call Premium Put Premium Strike Oct Aug $5.25 Aug $4.75 Oct $165 $8.1 $6.75 а. Buy one August 165 call contract. Hold it until the option expires. Determine the profits and graph the results. Then identify the break-even stock price at expiration. What is the maximum possible loss on this transaction? b. Buy one August 165 put contract. Hold it until the option expires. Determine the profits and graph the results. Then identify the break-even stock price at expiration. What is the maximum possible loss on this transaction? с. Short one October 165 put contract. Hold it until the option expires. Determine the profits and graph the results. Identify the break-even stock price at expiration. What is the maximum gain and loss on this transaction?
Call Premium Put Premium Strike Oct Aug $5.25 Aug $4.75 Oct $165 $8.1 $6.75 а. Buy one August 165 call contract. Hold it until the option expires. Determine the profits and graph the results. Then identify the break-even stock price at expiration. What is the maximum possible loss on this transaction? b. Buy one August 165 put contract. Hold it until the option expires. Determine the profits and graph the results. Then identify the break-even stock price at expiration. What is the maximum possible loss on this transaction? с. Short one October 165 put contract. Hold it until the option expires. Determine the profits and graph the results. Identify the break-even stock price at expiration. What is the maximum gain and loss on this transaction?
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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please answer all the 3 sub parts
Transcribed Image Text:Call Premium
Put Premium
Strike
Oct
Oct
Aug
$5.25
Aug
$4.75
$165
$8.1
$6.75
а.
Buy one August 165 call contract. Hold it until the option expires. Determine the profits
and graph the results. Then identify the break-even stock price at expiration. What is the
maximum possible loss on this transaction?
b.
Buy one August 165 put contract. Hold it until the option expires. Determine the profits
and graph the results. Then identify the break-even stock price at expiration. What is the
maximum possible loss on this transaction?
с.
Short one October 165 put contract. Hold it until the option expires. Determine the profits
and graph the results. Identify the break-even stock price at expiration. What is the
maximum gain and loss on this transaction?
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