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You sell one IBM July 90 call contract for a premium of $4 and two puts for a premium of $3 each. You hold the position until the expiration date, when IBM stock sells for $95 per share. You will realize a ______ on this strategy. Group of answer choicesA. $300 profit B. $100 loss C. $400 loss D. $200 profit

Respuesta :

Answer:th answer is $500 profit

Explanation:

Call premium =$4

Selling ibm july 90 call= C 90

Put premium = $3

2 IBM july put =2 P90

Initial income = (c90 + 2p90)*100 =(4+(2*3))*100 =$1000.00

Position value when final stock price =$95

Final stock income -initial stock income =position value(profit)

Profit =[-max(95-90) + 2max(90-95)]*100 + $1000 =$500 profit

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