Question: Stock A is currently trading @ 5500. A Long Strangle can be created by buying 50 Put strike 5400 @premium of 40 each and

Stock A is currently trading @ 5500. A Long Strangle can be created by buying 50 Put strike 5400 @premium of

Stock A is currently trading @ 5500. A Long Strangle can be created by buying 50 Put strike 5400 @premium of 40 each and buying 50 Call strike 5600 @ 60 each. Suppose Toby did this, and his profit is: 12000 10000 8000 6000 4000 2000 0 -2000 -4000 -6000 5100 5200 5300 J 5400 5500 5600 5700 5800 5900 Q9. Discuss advantages/disadvantages of this strategy. What is the max that Toby can lose and what are the breakeven stock prices?

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Lets start by defining a long strangle options strategy A long strangle strategy involves purchasing a put option and a call option with the same expi... View full answer

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