Knowing that the option on Google June 540 Call has a current premium of $13...
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Knowing that the option on Google June 540 Call has a current premium of $13 per share, the owner of 100 shares of Google (at a current market price of $540) expects the stock price to be neutral in the next 30 days and decides to short 1 call contract.
- What is the name of this option strategy?
- Prepare a scenario analysis with GOOG at 500, 510, 540 and 570 at expiration in a table with all P&Ls (stock, short call and total)
- Use these results to construct the profit and loss diagram for this position showing the breakeven price, the strike price and the 4 prices used in your analysis.
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