Create portfolio consisting of position

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Use the following to answer the next two questions. Alpha stock currently trades for $60/share. You believe that stock price will decrease in the near future and you are considering the following two portfolios to trade based on your belief: 1) Create a portfolio consisting of a position in 2500 shares of Alpha stock. 2) Create a portfolio consisting of a position in 25 3-month european put options. Each put option has a strike price of $64 and a premium of $6. Which portfolio would you have been better off selecting if the Alpha sells for $57 when the options expire? Portfolio 1 Portfolio 2 You'd be indifferent between each portfolio Cannot be determined.

Reference no: EM131814665

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