How much is your total initial cash outlay

Reference no: EM132177229

Financial Derivatives Questions -

1. Draw a profit and loss diagram for the simultaneous purchase of 1 shares of PFE and writing of 2 shares of APR 35 put on PFE. Price of PFE share is $30 and the price of APR 35 put is $7.00.

a. How much is your total initial cash outlay?

b. On expiration day, compute on a per share basis the value of your strategy and the profit generated by your strategy for the following stock prices on expiration day. For one share of common stock

Long or Short
PFE Stock Price on Expiration Day	1 Stock	2 Puts	Value of Strategy	Profit of Strategy
$25.00
$30.00
$35.00
$40.00
$45.00

c. Plot the profit profile using the stock price on expiration day as the horizontal axis.

Reference no: EM132177229

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