Stocks trade for $100 Zero coupon bond with a maturity of  one-year trades with an implied interest rate of 3% Calls with exercise prices of $90, $95,  $100, $105, and $110 trade at prices of 

$17.00, $14.00, $11.35, $9.10, and $7.25 respectively 

 Puts with exercise prices of $90, $95, $100, $105, and $110 trade at prices of  $4.30, $6.15, $8.40, $11.00, and $14.00 respectively 

 Challenge 

Construct the payoff profile for the following strategies, and the likely motivation/expected view about maturity date prices of traders who buy (and sell) the following positions: 

h. Buy $110 Call and Buy $90 Put 

i. Buy $90 Call, Write two $100 Calls, and Buy $110 Call

Answer rating: 100% (QA)

h Buy 110 Call and Buy 90 Put Buy 110 Call Payoff MaxStock Price 110 0 This option will be exercised only if the stock price at maturity is higher tha... View the full answer