Identify your maximum gain and loss

Reference no: EM133332100

Question: You own Verizon (VZ) stock which is trading at $35 and want to adjust your upside potential and downside risk. You decide to open a collar with a put strike of $30 and a call strike of $40. The put premium is $1 and the call premium is $2.

Graph the profit diagram of the individual spot and option positions as well as the combined collar profit diagram.
Identify your breakeven point(s).
Identify your maximum gain and loss.

Reference no: EM133332100

Questions Cloud

What is the forward rate for year 3 : Zero rates for one year, two year and 3 year investments are 4%, 5% and 5.6% per annum with continuous compounding. What is the forward rate for year 3

Certified cloud security professional : How might obtaining this Certified Cloud Security Professional (CCSP) certification help you in your career?

What is microsoft net cash flow : Payments are made in arrears. On March 20 the 6 month LIBOR is 4.6% with semiannual compounding. On September 20, what is Microsoft's net cash flow?

What is the intrinsic value of the put option : Shares of Walmart are trading at $95 per share. A put option with strike price of $100 is currently selling for $2. What is the intrinsic value of the put

Identify your maximum gain and loss : Graph the profit diagram of the individual spot and option positions as well as the combined collar profit diagram. Identify your breakeven point(s).

Analysis of functions and issues routinely faced : Select a local small business and analysis of its functions and the issues routinely faced.

What is the per-share estimate of the stocks intrinsic value : The required return on this stock is 10.00%. What is the per-share estimate of the stock's intrinsic value? a. $69.09 b. $73.24 c. $77.38 d. $80.63 e. $83.87

About collectivist culture : Assume you are involved in a conflict at work. Discuss three ways in which you might approach this conflict if you were from a collectivist culture

What is your advice to sonja : Sonja is your client. She's recently sold her business and has quite a bit of cash to invest. She's recently read about the great returns of Wash U's Endowment

User Account

All Pages