Long or bull straddle: Buy a put and a call with the same T and X IBM Call Put Expiration July Strike Last Last 100 7.35 11.66 1 contract for each Stock price/share 80 80.99 87.5 90 95 100 105 110 115 119.01 125 Call premium (Long call) Put premium (Long put) Payoff (call) Payoff (put) Profit

Long or bull straddle: Buy a put and a call with the same T and X IBM Call Put Expiration July Strike Last Last 100 7.35 11.66 1 contract for each Stock price/share 80 80.99 87.5 90 95 100 105 110 115 119.01 125 Call premium (Long call) Put premium (Long put) Payoff (call) Payoff (put) Profit

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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Question

Long or bull straddle: Buy a put and a call with the same T and X
IBM
Call
Put
Expiration
July
Strike
Last
Last
100
7.35
11.66
1 contract for each
Stock price/share
80
80.99
87.5
90
95
100
105
110
115
119.01
125
Call premium (Long call)
Put premium (Long put)
Payoff (call)
Payoff (put)
Profit

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