I don't like my investments to go down too much. Using $50000 I can buy 200 shares of Tesla, at $250/share. Or, I can invest 45000 in a safe stock, with 6% return, and with the remaining $5000 buy 1year Tesla Call Options with $19 per call, strike price $250. With this strategy, I use options to limit my losses in case Tesla crashes in price. On the other hand, if Tesla goes up to $400, how much money am I going to have in total?
I don't like my investments to go down too much. Using $50000 I can buy 200 shares of Tesla, at $250/share. Or, I can invest 45000 in a safe stock, with 6% return, and with the remaining $5000 buy 1year Tesla Call Options with $19 per call, strike price $250. With this strategy, I use options to limit my losses in case Tesla crashes in price. On the other hand, if Tesla goes up to $400, how much money am I going to have in total?
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
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![I don't like my investments to go down too much. Using $50000 I can buy 200
shares of Tesla, at $250/share. Or, I can invest 45000 in a safe stock, with 6% return,
and with the remaining $5000 buy 1year Tesla Call Options with $19 per call, strike
price $250. With this strategy, I use options to limit my losses in case Tesla crashes
in price. On the other hand, if Tesla goes up to $400, how much money am I going to
have in total?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8aafb9c9-5e12-44b2-8c4c-21494214d042%2F4a1a1eea-101d-43e6-96ee-5b38216210db%2Fod236rw_processed.jpeg&w=3840&q=75)
Transcribed Image Text:I don't like my investments to go down too much. Using $50000 I can buy 200
shares of Tesla, at $250/share. Or, I can invest 45000 in a safe stock, with 6% return,
and with the remaining $5000 buy 1year Tesla Call Options with $19 per call, strike
price $250. With this strategy, I use options to limit my losses in case Tesla crashes
in price. On the other hand, if Tesla goes up to $400, how much money am I going to
have in total?
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