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Several rumors concerning Value Rite stock are causing the market price of the stock to be quite volatile. Given this situation, you decide to buy both a one-month European $25 put and a one-month European $25 call on this stock. The call price per share is S0.60 and the put price per share is $2.10. Each option contract includes 100 shares. What will be your net profit or loss on these option positions if the stock price is $18 on the day the options expire? Ignore trading costs and taxes.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92848747

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