You establish a straddle on Walmart using September call and put options with a strike price of

Question:

You establish a straddle on Walmart using September call and put options with a strike price of $50. The call premium is $4.25 and the put premium is $5.

a. What is the most you can lose on this position?

b. What will be your profit or loss if Walmart is selling for $58 in September?

c. At what stock prices will you break even on the straddle?

Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.