You own Verizon (VZ) stock which is trading at $35 and want to adjust your upside potential and downside risk. You decide to open a collar with a put strike of $30 and a call strike of $40. The put premium is $1 and the call premium is $2.

1. Graph the profit diagram of the individual spot and option positions as well as the combined collar profit diagram.
2. Identify your breakeven point(s).
3. Identify your maximum gain and loss.

Answer rating: 100% (QA)

To make the benefit outlines we should separate the singular spot and choice positions first Spot Po... View the full answer