Suppose you invest in the S&R index for $1000, buy a 950-strike put, and sell a 1107

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Suppose you invest in the S&R index for $1000, buy a 950-strike put, and sell a 1107 strike call. Draw a profit diagram for this position. How close is this to a zero-cost collar?

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Derivatives Markets

ISBN: 9789332536746

3rd Edition

Authors: Robert McDonald

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Question Posted: Aug 12, 2015 02:31 AM

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Suppose you invest in the S&R index for $1000, buy a 950-strike put, and sell a 1107

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Our initial cash required to put on the collar ie the net option prem...View the full answer

Derivatives Markets

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