Equity research analysts give it an equal chance to be at $177 or $250 by 1 march You consider the following options offered by a broker A call with an exercise price of $185 and a premium of $15 A put with an exercise of $145 and a premium of $15 You Explain two possible option strategies based on this offer covered call or protective put Illustrate which of the two option strategies is generally for protection and which is to make gains Determine the pay off and the profit realise on the covered call and protective put under each of the two price scenarios by 1 march Appraise the effectiveness of a straddle and a butterfly option spread strategy in the scenario where the share price stays at its initial level of $175

Question: Equity research analysts give it an equal chance to be at $177 or $250 by 1 march . You consider the following options offered by

Equity research analysts give it an equal chance to be at $177 or $250 by 1 march .

You consider the following options offered by a broker :

A call with an exercise price of $185 and a premium of $15.

A put with an exercise of $145 and a premium of $15.

You Explain two possible option strategies based on this offer ; covered call or protective put;

Illustrate which of the two option strategies is generally for protection and which is to make gains.
Determine the pay-off and the profit realise on the covered call and protective put under each of the two price scenarios by 1 march.
Appraise the effectiveness of a straddle and a butterfly option spread strategy in the scenario where the share price stays at its initial level of $175.

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