Suppose you short the S&R index for $1000 and buy a 1050-strike call. Construct payoff and profit

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Suppose you short the S&R index for $1000 and buy a 1050-strike call. Construct payoff and profit diagrams for this position. Verify that you obtain the same payoff and profit diagram by borrowing $1029.41 and buying a 1050-strike put.

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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 short the S&R index for $1000 and buy a 1050-strike call. Construct payoff and profit

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This question is another application of PutCallParity Initially we have the following cost to enter ...View the full answer

Derivatives Markets

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