Strategy could you take to make profit on your planned trade

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Reference no: EM131087845

You run a mutual fund and you have decided that the most that Sears stock is worth is $20 and you plan on selling the stock when it reaches that point. What option strategy could you take to make a profit on your planned trade?

Using the following information calculate the portfolio value on the exercise date and the profit from your strategy.

Stock Price Today = $18.22

Strike Price = $20

Call Price = $2.54

Put Price = $3.35

Scenario 1. Sears’ stock price rises to $25 on the exercise date.

Scenario 2. Sears’ stock price falls to $15 on the exercise date.

Reference no: EM131087845

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