An investor has $27. They make the following trades at the same time on the same underlying
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Question:
An investor has $27. They make the following trades at the same time on the same underlying stock. The options all have the same expiration
- Sell (Write) a call with a strike of $30 for a premium of $4.
- Buy the stock for $29.
- Buy a put with a strike of $28 for a premium of $2.
At the expiration of the options, the stock is trading for $33, and the investor liquidates their position. What is their profit?
Expert Answer:
Lets break down the trades and calculate the investors profit 1 Sell Write a call with a strike of 3... View the full answer
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