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What is the economic profit of short strangle strategy

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Reference no: EM132512346

Today's price of AAPL is $200 per share. You are interested in a short strangle on AAPL with one year until maturity. You ask an option dealer to provide quotes on AAPL options. For a European call option with a strike of $225, the dealer quotes you a price of $10.93. For a European put option with a strike of $175, the dealer quotes you a price of $8.73. The c.c. risk-free interest rate is zero.

Question 1 : If the price of AAPL in one year is $230 per share, what is the economic profit of your short strangle strategy? Round your answer to three decimal places.

Reference no: EM132512346

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