The stock price of Lotus is currently $220 and the call option with strike price of...

The stock price of Lotus is currently $220 and the call option with strike price of $220 is $10. A trader purchases 100 shares of Lotus stock and short 1 contract of call options with strike price of $220. As a financial analyst at Citibank, you want to answers the following two questions: a. What is the maximum potential loss for the trader? b. When the stock price is $240 and the call is exercised, what is the trader’s net profit? Please choose all correct answers. Please also note that each incorrect answer will reduce the score by 10%. 1. When the stock price is $240 and the call is exercised, the trader’s net profit is $1000 2. The maximum potential loss for the trader is $20,000 3. When the stock price is $240 and the call is exercised, the trader’s net profit is $1300 4. When the stock price is $240 and the call is exercised, the trader’s net profit is $1100 5. The maximum potential loss for the trader is $21000 6. When the stock price is $240 and the call is exercised, the trader’s net profit is $1200 7. The maximum potential loss for the trader is $23000 8. The maximum potential loss for the trader is $22000

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jeff jeffy answered 1 year ago

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