A trader buys a call option with a strike price of $40 and a put...
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Finance
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A trader buys a call option with a strike price of $40 and a put option with a strike price of $50. Both options have the same maturity. The call costs $4 and the put costs $6.
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a) Construct a table showing the payoffs and net profits for all possible price ranges.
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b) Draw a diagram showing the variation of the traders profit with the asset price.
A trader buys a call option with a strike price of $40 and a put option with a strike price of $50. Both options have the same maturity. The call costs $4 and the put costs $6.
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a) Construct a table showing the payoffs and net profits for all possible price ranges.
-
b) Draw a diagram showing the variation of the traders profit with the asset price.
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