Use the following option prices for options on a stock index that pays no dividends to answer
Question:
Use the following option prices for options on a stock index that pays no dividends to answer questions. The options have three months to expiration, and the index value is currently 1,000.
Requirements:
a. In order to create a synthetic long forward with a price of 975, what options need ?to be bought or sold? What is the total price of those trades?
b. An investor buys the index and buys a 975 put. What is the name of this position ?and what are the minimum and maximum profits (or losses) on the position? ?
c. An investor buys a 975-strike call and sells a 1025-strike call. What is the name ?of this position and what are the minimum and maximum profits (or losses) on the position? ?
d. An investor buys the index, buys a 975-strike put and sells a 1025-strike call. What ?is the maximum profit? ?
e. An investor buys a 975-strike put and a 975-strike call. What is the name of this ?position and what is the maximum profit? ?