Question

In: Finance

Suppose you build an option portfolio by placing two separate orders. First, you purchase a call...

Suppose you build an option portfolio by placing two separate orders. First, you purchase a call contract on Stock A with a striking price of $120 for a premium of $5 per share. Second, you write two put contracts on Stock B with a striking price of $80 for a premium of $4 per share. You hold the options until the expiration date, when Stock A sells for $123 per share and Stock B sells for $78 per share. What is the option portfolio’s total profit or loss?

$400 loss

$200 loss

$0

$200 profit

$400 profit

Solutions

Expert Solution

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Answer : $ 200 Profit


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