Consider the following options portfolio: You buy an October 1 expiration call option on Microsoft with...
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Consider the following options portfolio: You buy an October 1 expiration call option on Microsoft with an exercise price of $300 and buy an October 1 put option with an exercise price of $300. a. Create a payoff table. (Hint: Your two potential future scenarios are Sr. < 300 & ST 300) b.Graph the payoff of this portfolio at option expiration as a function of the stock price at that time. c. What will be the profit/loss on this position if Microsoft is selling at $296 on the option expiration date? The premium for a Call option is $3. Premium for a put option is $4. Consider the following options portfolio: You buy an October 1 expiration call option on Microsoft with an exercise price of $300 and buy an October 1 put option with an exercise price of $300. a. Create a payoff table. (Hint: Your two potential future scenarios are Sr. < 300 & ST 300) b.Graph the payoff of this portfolio at option expiration as a function of the stock price at that time. c. What will be the profit/loss on this position if Microsoft is selling at $296 on the option expiration date? The premium for a Call option is $3. Premium for a put option is $4.
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