How would you use call and/or put option to protect the value of your portfolio? The...
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How would you use call and/or put option to protect the value of your portfolio? The current value of the portfolio is $10 million. The portfolio is made up of $6 million investment in Ford Motor Company stock and the rest is invested in 3M. The current stock price of Ford is $15 and the price of 3M is $125. The exercise prices of the available Ford and 3M options are $14 and $123.50 respectively. How would you use call and/or put option to protect the value of your portfolio? The current value of the portfolio is $10 million. The portfolio is made up of $6 million investment in Ford Motor Company stock and the rest is invested in 3M. The current stock price of Ford is $15 and the price of 3M is $125. The exercise prices of the available Ford and 3M options are $14 and $123.50 respectively.
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To protect the value of your portfolio using call andor put options you can implement a strategy known as a protective put and a protective collar Let... View the full answer
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