Ask Question
28 January, 09:39

An investor purchases a stock for $39 and a put for $0.55 with a strike price of $32. The investor sells a call for $0.55 with a strike price of $42. What is the maximum profit and loss for this position? (Loss amount should be indicated by a minus sign.)

+2
Answers (1)
  1. 28 January, 11:53
    0
    The maximum profit and loss for this position is $3 and - $7 respectively

    Explanation:

    The computations are shown below:

    For maximum profit:

    = Strike price at the sale - stock price + put price - call price

    = $42 - $39 + $0.55 - $0.55

    = $3

    For maximum loss:

    = Strike price at purchase - stock price + put price - call price

    = $32 - $39 + $0.55 - $0.55

    = - $7

    Simply we take the difference between the strike price, and the stock price and after that the put and call price are adjusted
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “An investor purchases a stock for $39 and a put for $0.55 with a strike price of $32. The investor sells a call for $0.55 with a strike ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers