Question: Straddle problem Given a stock with a current strike price of $25 and the following information; Write 1 ABC September 25 Calls @ 1 Write

Straddle problem

Given a stock with a current strike price of $25 and the following information;

Write 1 ABC September 25 Calls @ 1 Write 1 ABC September 25 puts @ 3

What is the total premium paid? (assume 1 contract = 100 shares)

What is the maximum investor return?

What is the maximum investor loss?

Why do investors use straddles?

If an investor buys a derivative position, are they long or short?

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