Consider the following options portfolio: You write a June 2017 expiration call option on Microsoft with ...

Consider the following options portfolio: You write a June 2017 expiration call option on Microsoft with exercise price $72. You also write a June expiration Microsoft put option with exercise price $70. (LO 15-2) a. Graph the payoff of this portfolio at option expiration as a function of the stock price at that time.

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Expert Solution

Short Call payoff = -max(St - X, 0)

Short Put payoff = -max(X - St, 0)

Portfolio payoff = Short Call payoff + Short Put payoff

Screenshot with formulas

Can you please upvote? Thank You :-)

jeff jeffy answered 11 months ago

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