What is the cost of holding the long call and long put

Assignment Help Financial Management

Reference no: EM131990041

Today’s price of Home Depot’s common stock is $50. A July 2018 call option on this Home Depot’s stock has an exercise price of $55 and costs $5. A July 2018 put option on this stock has an exercise price of $45 and costs $2.

A. What is the cost of holding the long call and long put and what is this position called?

B. At what stock price or prices will the position show a zero profit?

C. What is the worst loss that the position can incur?

D. What is the best outcome and for what range of stock prices does it occur?

Reference no: EM131990041

Questions Cloud

Interest over the three-year life of the computer system : How much would Sauer Food Company save in interest over the three-year life of the computer system if the one-year loan is utilized

What is the lower ear : Varys and Baelish are roommates. what is the lower EAR?

What is portfolio of options worth : What is the cost of holding the long call and long put and what is position called? If the stock price is $135 at expiration, what is portfolio of options worth

Assume the term structure of interest rates : Assume term structure of interest rates becomes inverted with short-term rates going to 11 % and long-term rates 5 % points lower than short-term rates.

What is the cost of holding the long call and long put : What is the cost of holding the long call and long put and what is this position called?

Calculate standard deviation accordingly : You should find E(R) first and calculate standard deviation accordingly.

Considering the purchase of unit investment trust : Jed is considering the purchase of a unit investment trust (UIT) with a three-year life.

The firm earnings before interest and taxes : Brown Office Supplies recently reported $198,939 of sales, How much was the firm's earnings before interest and taxes (EBIT)?

What is the current dollar price assuming : The bonds make semiannual payments. If the YTM on these bonds is 5.5 percent, what is the current dollar price assuming a $1,000 par value?

User Account

All Pages