Plot the payoff and profit diagrams for this portfolio

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Reference no: EM132051519

If Wal-Mart stock is currently selling for $55 per share. A January 50 put sells for $2 and a January 60 call for $3.

If you purchase the 50 put and 60 call:

a. What is the breakeven stock price for this portfolio?

b. Plot the payoff and profit diagrams for this portfolio.

c. Discuss the pros and cons of this strategy.

Reference no: EM132051519

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