Question 1 [10 Points]:

A collar is an options strategy that brackets the value of a portfolio between two bounds. Suppose that an investor currently is holding a long position in Disney stock, which is currently selling at about $100 per share. A lower bound of $90 can be placed on the value of the portfolio by buying a protective put with strike price $90. This protection, however, requires that the investor pay the put premium. To raise the money to pay for the put, the investor might write a call option, say, with strike price $110. The call might sell for roughly the same price as the put, meaning that the net outlay for the two options positions is approximately zero.

INFORMATION NEEDED TO BE GRAPH!!!

The latest stock price of Disney is $98.6 as of September 23, 2017. Graph the profit diagram using Microsoft Excel for the collar strategy outlined above. You may use class demonstrations and sample Excel files uploaded on Blackboard as reference. You need do the following in order to obtain full credits: 1. [8 Points] Graph the profit diagram using Microsoft Excel for the collar strategy outlined above. Copy and paste the scatter plot from Excel to word file. 2. [2 Points] Write down your brief comments on the collar strategy

C04340LXAM 1 lake home%20(1).pdf money to pay for the put, the investor might write a call option, say, with strike price S110. The call might sell for roughly the same price as the put, meaning that the net outlay for the two options positions is approximately zero To execute a collar strategy, you buy a put option: EXP Jan, 2018 Stock Name Strike Price $90 Premium $1.4 Disney: PUT And at the same time vou sell a call option: EXP Stock Name Disney: CALL Strike Price $110 Premium $1.35 Jan, 2018 The latest stock price of Disney is $98.6 as of September 23, 2017. Graph the profit diagram using Microsoft Excel for the collar strategy outlined above. You may use class demonstrations and sample 9/27/2017