Suppose a financial manager buys call options on 50,000 barrels of oil with an exercise price of
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Suppose a financial manager buys call options on 50,000 barrels of oil with an exercise price of $65 per barrel. She simultaneously sells a put option on 50,000 barrels of oil with the same exercise price of $65 per barrel. Consider her gains and losses if oil prices are $60, $62, $65, $68, and $70. What do you notice about the payoff profile?
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Related Book For
Corporate Finance
ISBN: 978-0077861759
11th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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