Question: Using the data below, assume that you think that the analysts suggested range for the stocks target price reflects your own expectations. Assume that you
Using the data below, assume that you think that the analysts suggested range for the stocks target price reflects your own expectations. Assume that you bought the Call butterfly spreads that you could not immediately implement by buying and exercising the options right away in the question above. Assuming you plan to implement these spread strategies until it is profitable to exercise the options:
Compute the break-even points (i.e., the upside and downside break-even points) for each Call butterfly spread.
For each Call butterfly spread, what would be the percentage increase and decrease in the stock price required to break even?
Suppose the stocks price moves to the Analysts low target price 5 days after you setup the spreads, what would be your total profit.
Suppose the stocks price moves to the Analysts high target price 5 days after you setup the spreads, what would be your total profit.
Price targets: Current: $89.74 High:133.00 Low: 54.00
| Last Price | Strike |
| 25.5 | 70 |
| 14.85 | 75 |
| 10.88 | 80 |
| 7.34 | 85 |
| 4.25 | 90 |
| 2.15 | 95 |
| 0.95 | 100 |
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