Question

In: Finance

You own (are long) a call with an exercise price of 110 and a put at...

  1. You own (are long) a call with an exercise price of 110 and a put at 125.

(Please include a table with at least 50 data points for the graph. Graph the value of your portfolio as a function of the relevant stock price. Graph for stock prices between 100 and 140.)

Solutions

Expert Solution

payoff from call option = Max( S-X, 0)

Pay off from Put option = Max( X-S, 0)

X= strike price , S= Spot price

Pay off from portfolio = Payoff from call option + Payoff from Put option

110 125
Spot price Call Payoff Put Payoff Payoff Of portfolio
100 0 25 25
101 0 24 24
102 0 23 23
103 0 22 22
104 0 21 21
105 0 20 20
106 0 19 19
107 0 18 18
108 0 17 17
109 0 16 16
110 0 15 15
111 1 14 15
112 2 13 15
113 3 12 15
114 4 11 15
115 5 10 15
116 6 9 15
117 7 8 15
118 8 7 15
119 9 6 15
120 10 5 15
121 11 4 15
122 12 3 15
123 13 2 15
124 14 1 15
125 15 0 15
126 16 0 16
127 17 0 17
128 18 0 18
129 19 0 19
130 20 0 20
131 21 0 21
132 22 0 22
133 23 0 23
134 24 0 24
135 25 0 25
136 26 0 26
137 27 0 27
138 28 0 28
139 29 0 29
140 30 0 30

jeff jeffy answered 8 months ago
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