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Option Payoffs and Profits $40 $20 $0 Option Payoff Option Profit - Exercise Price -$20 -$40 $10 $20 $30 $40 $50 $60 $70 $80 Stock Price At Maturity Long Call $40 Long Call $40 + Short Call $50 Long Call $20 + Short Call $35 Short Call $40 + Short Put $40 Long Put $40 - Long Call $50 Long Underlying $20 + Short Call $20 ng Call $25 + Short Call $35 + Short Call $35 + Long Call $45 Short Call $25 + Long Call $35 + Long Call $35 + Short CallI $45 Long Put $40 Long Put $40 + Long Call $40 Payoff and Profit

Option Payoffs and Profits $40 $20 $0 Option Payoff Option Profit - Exercise Price -$20 -$40 $10 $20 $30 $40 $50 $60 $70 $80 Stock Price At Maturity Long Call $40 Long Call $40 + Short Call $50 Long Call $20 + Short Call $35 Short Call $40 + Short Put $40 Long Put $40 - Long Call $50 Long Underlying $20 + Short Call $20 ng Call $25 + Short Call $35 + Short Call $35 + Long Call $45 Short Call $25 + Long Call $35 + Long Call $35 + Short CallI $45 Long Put $40 Long Put $40 + Long Call $40 Payoff and Profit

Essentials Of Investments
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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State options strategy with the correct expiry profit diagram.

Option Payoffs and Profits $40 $20 $0 Option Payoff Option Profit Exercise Price -$20 -$40 $0 $10 $20 $30 $40 $50 $60 $70 $80 Stock Price At Maturity Long Call $40 Long Call $40 + Short Call $50 Long Call $20 + Short Call $35 Short Call $40 + Short Put $40 Long Put $40 + Long Call $50 Long Underlying $20 + Short Call $20 Long Call $25 + Short Call S35 + Short Call $35 + Long Call $45 Short Call $25 + Long Call $35 + Long Call $35 + Short Call $45 Long Put $40 Long Put $40 + Long Call $40 Payoff and Profit
Transcribed Image Text:Option Payoffs and Profits $40 $20 $0 Option Payoff Option Profit Exercise Price -$20 -$40 $0 $10 $20 $30 $40 $50 $60 $70 $80 Stock Price At Maturity Long Call $40 Long Call $40 + Short Call $50 Long Call $20 + Short Call $35 Short Call $40 + Short Put $40 Long Put $40 + Long Call $50 Long Underlying $20 + Short Call $20 Long Call $25 + Short Call S35 + Short Call $35 + Long Call $45 Short Call $25 + Long Call $35 + Long Call $35 + Short Call $45 Long Put $40 Long Put $40 + Long Call $40 Payoff and Profit
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