A Stock trades for $100. Interest rates for a year are 2%. Calls maturing in a year
Fantastic news! We've Found the answer you've been seeking!
Question:
A Stock trades for $100. Interest rates for a year are 2%. Calls maturing in a year with exercise prices of $90, $95, $100, $105, and $110 trade at prices of $17, $14, $11, $9, and $7 respectively. Puts maturing in a year with exercise prices of $90, $95, $100, $105, and $110 trade at prices of $4, $6, $8, $11, and $14 respectively.
Explain with reasons what options based trading strategies you will use if you expect the end of year price to be between $95 and $100?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: