Suppose you bought 2 IBM call options with a strike price of 130 and call premium of $3. You also wrote 1 IBM put option with an exercise price of $125 and a put premium of $4. The calls and puts both expire in three months. Assume each option contract is for 100 shares of stock. What is your payoff at expiration of your investment if IBM stock sells for $122 on the expiration date?

 

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Call options will not be exercised as the expiration pric... View the full answer