Calculate what its strike price is

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Consider a "long strangle" constructed from options which have an expiration date of September 15, 2016 (the third Friday in September). The following table displays the possible prices of Boeing stock on September 15, as well as the payoffs accruing to someone who holds a long strangle on Boeing stock:

Probability

0.2

0.3

0.2

0.2

0.1

Stock price

$80

$90

$100

$110

$120

Gain from long strangle

$15

$5

$0

$10

$20

A long strangle is created using two options. For each option in the strangle above, indicate whether it is a put or a call, whether it is bought or sold, and calculate what its strike price is. Explain your answer.

Reference no: EM131152499

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