Question: 4. Reverse of a protective put (a short stock + a short put) An investor is shorting a BAC stock. The stock borrowed must be

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4. Reverse of a protective put (a short stock + a short put) An investor is shorting a BAC stock. The stock borrowed must be returned at $34.00 per share. She shorts a 35 put BAC option. Its option premium is $3.20. 34 4. Reverse of A Protective Put Strategy MCD must returned to a broker at: Strike Price Premium 35 3.2 -- Short Stock S(Stock Price at expiration) Short Stock Short Put Portfolio (Reverse of A Protective Put) - Short Put Portfolio (Reverse of A Protective Put) 20 25 30 35 40 45 50 Question4. From the P&L plot, provide you findings on what situation a reverse of protective put strategy would be desirable. Type your answer in this box. 4. Reverse of a protective put (a short stock + a short put) An investor is shorting a BAC stock. The stock borrowed must be returned at $34.00 per share. She shorts a 35 put BAC option. Its option premium is $3.20. 34 4. Reverse of A Protective Put Strategy MCD must returned to a broker at: Strike Price Premium 35 3.2 -- Short Stock S(Stock Price at expiration) Short Stock Short Put Portfolio (Reverse of A Protective Put) - Short Put Portfolio (Reverse of A Protective Put) 20 25 30 35 40 45 50 Question4. From the P&L plot, provide you findings on what situation a reverse of protective put strategy would be desirable. Type your answer in this box

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