How the investor profit or loss varies with the stock price

Reference no: EM132052253

Question: The price of a stock is $40/share. The price of a one-year European put option on the stock with a strike price of $30 is quoted as $7/share and the price of a one-year European call option on the stock with a strike price of $50 is quoted as $5/share. Suppose that an investor buys to 100 share Draw a diagram illustrating how the investor's profit or loss varies with the stock price over the next year.

Reference no: EM132052253

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