An option trader considers the following strategy, Ask an Expert

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An option trader considers the following strategy concerning the stock XYZ. The stock currently trades at $32. Option trader buys a call option with strike 30, pays premium of $3 per share, writes a call at strike 35, and collects $1 dollar. Please construct a figure that depicts the profit at expiration with different prices of the underlying stock XYZ. Could you also discuss, what are the expectations of the trader about the future price of the stock if this strategy is implemented?

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Financial Management, Finance

Category:- Financial Management
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