A trader shorts 2 european calls and 3 european puts on a, Ask an Expert

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A trader shorts 2 European calls and 3 European puts on a stock. Both the calls and puts will be expired in 3 months and are traded at $5 and $4 with strike prices $45 and $40, respectively.

Find the range of the underlying asset price such that the trader's positions will lead to a profit in three months?

What will be the profit/loss of a short strangle created using the call and put options, if the stock price is $60 at expiration?

If the risk free rate is 5% with continuous compounding and the stock price is 43, what is the price of the 3-month European put option with a strike price of $45?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92333045

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