The trader has no prior position in the underlying stock

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7. With the underlying stock trading at 77.25, a trader exercises 10 March 70 calls and 12 February 85 puts. At the same time, the trader is assigned on 10 February 70 calls and 4 February 95 puts. If the trader has no prior position in the underlying stock, as a result of all exercises and assignments what will be the trader's total underlying position? What will be the resulting cashflow to the trader's account (credit or debit? How much?)? [Instructor's note: "Assigned on" means the option holder chose to exercise the options you wrote. The problem asks 1) How many shares does the trader have after these four options are exercised? 2) How much cash comes in or goes out because of this?]

Reference no: EM13675497

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