Assume you sell 100 shares of Bowie Corporation short at $72. You also buy a 70 call

Question:

Assume you sell 100 shares of Bowie Corporation short at $72. You also buy a 70 call option for 5.25 to protect against the stock price going up.

a. If the stock ends up at $90, what will be your overall gain or loss?

b. If the stock ends up at $50, what will be your overall gain or loss?

c. If you have an unprotected short sale position (no call option), what is the most you could lose?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...