You believe that PEP price will only vary slightly in the coming days and therefore you decide to follow a Butterfly strategy using three call options with strikes 116, 127 and 138, which have premiums of 18, 17, and 13, respectively. If the stock price is 164 today, what is the total profit of your portfolio. Keep in mind that each call option contract controls 100 shares. Please round your answer to the nearest three decimals.
You believe that PEP price will only vary slightly in the coming days and therefore you decide to follow a Butterfly strategy using three call options with strikes 116, 127 and 138, which have premiums of 18, 17, and 13, respectively. If the stock price is 164 today, what is the total profit of your portfolio. Keep in mind that each call option contract controls 100 shares. Please round your answer to the nearest three decimals.
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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Transcribed Image Text:You believe that PEP price will only vary slightly in the coming days and therefore you decide
to follow a Butterfly strategy using three call options with strikes 116, 127 and 138, which
have premiums of 18, 17, and 13, respectively. If the stock price is 164 today, what is the
total profit of your portfolio.
Keep in mind that each call option contract controls 100 shares. Please round your answer
to the nearest three decimals.
Transcribed Image Text:You believe that PEP price will only vary slightly in the coming days and therefore you decide
to follow a Butterfly strategy using three call options with strikes 116, 127 and 138, which
have premiums of 18, 17, and 13, respectively. If the stock price is 164 today, what is the
total profit of your portfolio.
Keep in mind that each call option contract controls 100 shares. Please round your answer
to the nearest three decimals.
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