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Finance Question - Peach, Inc.




Question;You have $1,000 to invest for six months. You can buy stocks of Peach, Inc. The stock price is $100 per share. To protect you from losing too much of your investment, you also purchase put options each for $1.00 with a strike price of $90. To fund this put, you also write and sell call options on the stocks each for $1.00 with a strike price of $105. What is the maximum profit and loss for your position? Draw the profit and loss diagram for your strategy as a function of the stock price at expiration (assume that stock investment, put and call options have the same expiration date).


Paper#48113 | Written in 18-Jul-2015

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