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solve step by step and complete solution 3. The price of a stock is...

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solve step by step and complete solution

3. The price of a stock is $50. The price of a 1-year put option on the stock with a strike price of $40 is quoted as $10 and the price of a 1-year European call option on the stock with a strike price of $60 is quoted as $8. Suppose that an investor buys 50 shares, shorts 50 call options and buys 50 put options. Fill the table (21 points) Please fill the table for 50 shares and 50 calls and 50 puts. $25 $30 $40 $50 $55 $60 $65 Stock price (ST) in the market Profit for buying 50 shares of stock Option value (Pay off) Short 50 calls Premium for 50 calls Profit from shorting 50 call options Option value (Pay off) Buy 50 puts Premium for 50 puts Profit from buying 50 put options TOTAL Profit

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