Suppose you purchased a Texas Instruments August 75 call contract quoted at $8.50 and wrote a Texas Instruments August 80 call contract quoted at $6. If the price of a Texas Instruments stock at maturity is $79, your profit will be _________.?

2. ABC Corporation's common stock has been trading in a narrow price range last month and you are confident that it will stay in this range over the next three months. But you don't know if it will go up or down. A three-month call option on ABC stock with a current price of the stock of $100 per share and a strike price of $100 is $10. The quarterly put option on ABC stock with a strike price of $100 is $8.00.

a. What will be the profit/loss if ABC stock drops to $95?

b. What would be the breakeven points of your strategies?

Answer rating: 100% (QA)

1 To calculate the profit we need to consider the options contracts and the stock price at maturity ... View the full answer