Unformatted text preview: Question3 A oneyear European call option on one share of Dot.com with an exercise price of $50 is currently trading at $10, and a oneyear European put option on one share of Dot.com with an exercise price of $50 is currently trading also at $10. Fill the tables below for the profit of the following portfolios as a function of the stock price at maturity. a) Buy one call and one put option (a long straddle). b) Sell one call and one put option (a short straddle). Question4 Draw on a graph the value of the following portfolios ( Portf T ) at maturity as a function of the price of the underlying stock ( S T ). 1) Buy a call option with strike price K C and a put option with strike price K P such that K P > K C . 2) Buy a share of the stock and sell a call option with the same strike price K ....
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This note was uploaded on 12/10/2011 for the course MGCR 341 taught by Professor Trainor during the Winter '08 term at McGill.
 Winter '08
 trainor

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