Essay
A share of stock is currently selling for $80. The $80 call option is priced at $8 and the $80 put option is priced at $4. Assume an investor buys one share, one call, and one put option. What is the net profit for this strategy at expiration day stock prices of $0, $50, $80, $86, and $110? Define in words the maximum potential loss and the maximum potential gain for this strategy. What value does the put add to this strategy? What value does the call add?
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Correct Answer:
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The maximum potential loss equals the c...View Answer
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