2. A long straddle is an option strategy in which the investor buys a call option and a put option with the same strike price and the same expiration date. If the strike is $40/share and the premiums for the call and the put are $4/share and $3/share respectively. Draw the profit loss diagram for the long straddle strategy.

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Answer rating: 100% (QA)

To draw the profitloss diagram for the long straddle strategy we need to consider the payoff from both the call option and the put option at expiratio... View the full answer