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
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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?
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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