Question: Question 7: 1. Both a call option and a put option are currently traded on stock AXT. Both options have a strike price of $90

Question 7: Question 7: 1. Both a call option and a put option are

1. Both a call option and a put option are currently traded on stock AXT. Both options have a strike price of $90 and maturity (T) of three months. The call premium (Co) is $2.75, the put premium (Po) is $4.12, and the underlying stock price (So) is $89.50. Assume that you trade one contract that has 100 shares when you calculate profit or loss. What will be your profit (or loss) if you take a long position on the put option and the underlying stock price at the option maturity (ST) becomes $87? Answer: (Circle one: Profit, Loss) = $ per contract Show your calculation here

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