Todayrsquos price of ibmrsquos common stock is 150 a may, Ask an Expert

Finance

Today’s price of IBM’s common stock is $150. A May 2018 call option on this IBM stock has an exercise price of $150 and costs $5. A May 2018 put option on this stock also has an exercise price of $150 and costs $4.

a. What is the cost of holding the long call and long put, and what is this position called?

b. If the stock price is $135 at expiration, what is the portfolio of options worth?

c. If the stock price is $160, what is the portfolio of options worth?

d. How do these profits and losses compare with the value of the stock at expiration?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92827694

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