Problem 15-10 An investor purchases a stock for $53 and a put for $.65 with a st
ID: 2653422 • Letter: P
Question
Problem 15-10
An investor purchases a stock for $53 and a put for $.65 with a strike price of $49. The investor sells a call for $.65 with a strike price of $60. What is the maximum profit and loss for this position? (Loss amount should be indicated by a minus sign.)
An investor purchases a stock for $53 and a put for $.65 with a strike price of $49. The investor sells a call for $.65 with a strike price of $60. What is the maximum profit and loss for this position? (Loss amount should be indicated by a minus sign.)
Explanation / Answer
The Investor sells the call for $65
Strike Price = $60
Maximum Profit = $65 - $60 = $5 (Exercise price -Strike Price of a Call option)
Maximum Loss = Cannot be determined as the put option has not been Exercised and nothing other wise given.