onsider the following options portfolio. You write a call option on IBM with exercise ou also write an IBM put option with exercise price $80. The price of the call option is e price of the put is $2.45. Will you exercise your option if IBM is selling at $83 on the ty date? What will be your loss/profit? What if IBM is selling at $90?

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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Consider the following options portfolio. You write a call option on IBM with exercise price
$85. You also write an IBM put option with exercise price $80. The price of the call option is $0.95
and the price of the put is $2.45. Will you exercise your option if IBM is selling at $83 on the option
maturity date? What will be your loss/profit? What if IBM is selling at $90?
Transcribed Image Text:Consider the following options portfolio. You write a call option on IBM with exercise price $85. You also write an IBM put option with exercise price $80. The price of the call option is $0.95 and the price of the put is $2.45. Will you exercise your option if IBM is selling at $83 on the option maturity date? What will be your loss/profit? What if IBM is selling at $90?
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