Consider the following information:

Stock price is $105.00

Exercise price (E) is $95.00

Put price is $5.00

Do this exercise on a per share basis, i.e., do not assume 100 shares per contract.

What is the profit profile on a hedge where the investor shorts 1share and writes 2 puts?

Do the algebra and diagram the profit potential

Answer rating: 100% (QA)

To determine the profit profile on a hedge where the investor shorts 1 share and writes 2 puts we ca... View the full answer