About the stock price future movement

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The common stock of the MinoMeno, Inc. has been trading in a narrow range around $40 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $44 is $8.00, and the price of a 3-month call option with an exercise price of $44 is $2.00. Assume the current stock price is $40.

A. What would be a simple options strategy using a put and call to exploit your conviction about the stock price’s future movement?

B. What is the most money you can make on this position? How far can the stock price move in either direction before you lose money?

Reference no: EM131980525

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