For risk management purposes, Alanood decided to undertake a strategy consisting of buying a put...
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Accounting
For risk management purposes, Alanood decided to undertake a strategy consisting of buying a put that has a strike price of $58.5 and selling a put that has a strike price of 38.5.
The initial stock price was $40, the put premiums were $1.5 and $6.25
a/ What is the max loss? (2 marks)
b/ What is the GlL if the stock price at expiration is 42.5? (2 marks)
c/ What is the breakeven using the max gain formula? (2 marks)
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