Calculate the profit of bill straddle strategy

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Reference no: EM13297429

Advanced Biomed Co. (ABC) is developing a major cancer-fighting drug. ABC stock pays no dividend and is selling for $23.75. Bill decides to follow a straddle strategy by buying one European call and one European put on the stock with the strike price of $25 and the maturity of three months. The call is selling for $6 and the put for $7. Calculate the profit (loss) of Bill's straddle strategy if three months later, the price of ABC stock is 0, $12, $25, $38, and $50, respectively.

Reference no: EM13297429

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