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QUESTION
Suppose you believe a stock will increase in value (currently trades @ $90/share). -You have$9000to invest Strategies:
Suppose you believe a stock will increase in value (currently trades @ $90/share).
-You have$9000to invest
Strategies:
1) Invest entirely in stock, 100 shares for $90 each
• Invest entirely in at-the-money options; buy 900 calls,each selling at $10
How much will your investment and HPR be if the stock trades @ $80/share in 6 months?How much will your investment and HPR be if the stock trades @ $100/share in 6 months?
How much will your investment and HPR be if the stock trades @ $110/share in 6 months?
