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QUESTION
Suppose we are long 5 call options struck at 40 costing $6 each, and short 3 call options struck at 35 costing $10 each. All options expire in 1...
- Suppose we are long 5 call options struck at 40 costing $6 each, and short 3 call options struck at 35 costing $10 each. All options expire in 1 month and the 1 month interest rate is 10 basis points. Under what circumstances do we break even? What is our maximum loss and at what stock price does it occur? What is our maximum gain, and at what stock price?
