Consider a European at the money call and a european at the money put on IBM stock

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Consider a European at the money call and a european at the money put on IBM stock with strike $100 nad 3 months to maturity. The call is selling at $5 and the put price is $4. Suppose an investor bought 1 call, two puts and 1 share of the stock.

a)Draw the payoff diagram of this portfolio, on a per-share basis.

b)Draw the profit/loss diagram for the buyer and the seller of this portfolio, on a per-share basis.

c)what is the expiration date stock price range within which the investor will make a positive profit?

Related Book For answer-question

Investments

ISBN: 9780073530703

9th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Posted Date: Jun 13, 2023 01:17 AM

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Consider a European at the money call and a european at the money put on IBM stock

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Investments

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