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Consider a call and put on the same underlying asset. The call has an exercise price...

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Finance

Consider a call and put on the same underlying asset. The callhas an exercise price of $100 and costs $20. The put has anexercise price of $90 and costs $12. 3.1 Graph a short position ina strangle based on these two options. [3] 3.2 What is the worstoutcome from selling the strangle? [1] 3.3 At what price of theasset does the strangle have a zero profit?

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Short Position in Strangle1Selling    See Answer
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Transcribed Image Text

Consider a call and put on the same underlying asset. The callhas an exercise price of $100 and costs $20. The put has anexercise price of $90 and costs $12. 3.1 Graph a short position ina strangle based on these two options. [3] 3.2 What is the worstoutcome from selling the strangle? [1] 3.3 At what price of theasset does the strangle have a zero profit?

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