The price of a stock is 48 you buy a call option that is 2, Ask an Expert

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The price of a stock is $48. You buy a call option that is $2 out of the money for a cost of $3. At the same time, you sell a put option that is $3 out of the money for $2 and buy a put option that is $10 out of the money for 50c. All options have the same expiry and assume r = 0 (erT = 1).

A) Draw the payoff diagram at expiration. Clearly label (inc. breakeven point(s))

B) What is the maximum upside (gain) and downside (loss)

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Financial Management, Finance

Category:- Financial Management
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