Expectations of the trader about future price of stock

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Reference no: EM131914352

An option trader considers the following strategy concerning the stock ABC. The stock currently trades at $32. Option trader buys a call option with strike 30, pays premium of $3 per share, writes a call at strike 35, and collects $1 dollar. Please construct a figure that depicts the profit at expiration with different prices of the underlying stock ABC. Could you also discuss, what are the expectations of the trader about the future price of the stock if this strategy is implemented?

Reference no: EM131914352

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