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Suppose you buy a straddle, which means you purchase a put and a call with the...

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Finance

Suppose you buy a straddle, which means you purchase a put and acall with the same strike price. The put price is $1.70 and thecall price is $2.10. Assume the strike price is $60. What are theexpiration date payoffs to this position for stock prices of $55,$57.50, $60, $62.50, and $65? What are the expiration date netprofits to this position for these same stock prices? What are thebreak-even stock prices?

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4.2 Ratings (607 Votes)
If the stock price is 55 Payoff on put option 60 55 5 Payoff on call option 0 Payoff of position 5 Net profit of position Payoff of position premium paid 5 170 210 120 If the stock price is 5750    See Answer
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Suppose you buy a straddle, which means you purchase a put and acall with the same strike price. The put price is $1.70 and thecall price is $2.10. Assume the strike price is $60. What are theexpiration date payoffs to this position for stock prices of $55,$57.50, $60, $62.50, and $65? What are the expiration date netprofits to this position for these same stock prices? What are thebreak-even stock prices?

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