What is the benefit and cost of the protective put

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Reference no: EM131060432

Two very popular strategies when holding a stock are: 1) Covered Call and 2) Protective Put. Looking at the payoff of these strategies (either find it or draw them) and following the logic of figures 22.4, 22.5 and 22.6 making the payoff of the combination of different positions:

What is the benefit and cost of the protective put if you start holding a stock?

What is the benefit and cost of the Covered Call if you start holding a stock?

In other words, if you hold a stock what are the risks and benefits? then if you pursue the protective put or covered call, what do you gain and what do you lose?

Reference no: EM131060432

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