1 0 . Construct profit diagrams or profit tables on expiration to show what position in IBM...
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Question:
Construct profit diagrams or profit tables on expiration to show what position in IBM puts, calls andor underlying stock best expresses the investors objectives described below. Assume IBM currently sells for $ so that profit tables for stock prices between $ and $in $ increments are appropriate. Also assume that at the money" puts and calls cost $ each.
An investor wants upside potential if IBM increases but wants net losses no greater than $ if prices decline.
Maturity
An investor wants to capture profits if IBM declines in price but wants a guaranteed limited loss if prices increase.
An investor already owns IBM at a price of $ and wants to protect against price declines but wants to retain upside if prices rise. Only one transaction is permitted here.
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