Explain why a trader may choose to exercise such a strategy

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Reference no: EM132031658

A trader is considering purchasing one share of stock and writing two at the money call options. The current price of the stock is $50 and the price of the call is $4.

Create a table and a diagram illustrating the profit at termination from these positions for various levels in the price of the underlying.

Graph each of the positions separately as well as the combined position. Explain why a trader may choose to exercise such a strategy.

Reference no: EM132031658

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