What is the maximum potential loss for the trader

Reference no: EM133251573

Question - The stock price of BAC is currently $150 and a put option with strike price of $150 is $10. A trader goes long 300 shares of BAC stock and long 3 contracts of the put options with strike price of $150.

a. What is the maximum potential loss for the trader?

b. When the stock price is $161 on the expiration, what is the trader's net profit?

Reference no: EM133251573

Questions Cloud

What is the value of the company equity : Edwards Construction currently has debt outstanding with a market value of $450,000 and a cost of 8 percent. What is the value of the company equity

What early actions should have been taken to reduce the risk : What early actions should have been taken to reduce the risks and Discuss some principles of risk management that were ignored

Do you believe in extra-sensory perception : Given this knowledge, do you believe in extra-sensory perception? What about ghosts or spirits? Why or why not?

What will be task burn down and work down for sprint : What will be task burn down and work down for sprint 1 You have a project sprints into 1-week long sprints. The project start date is 1 May 2022

What is the maximum potential loss for the trader : The stock price of BAC is currently $150 and a put option with strike price of $150 is $10. What is the maximum potential loss for the trader

How can we as christians take the knowledge of god : How can we as Christians take the knowledge of God, the works of God, and the nature of God, and use them poorly in the church like Green argued?

How amazon successfully uses this digital disruption : MG3009 Brunel University London Provide an example detailed case study on how AMAZON successfully uses this digital disruption technology to gain a strategic

Determine the price of the american style derivative : Using the Cox-Ross-Rubinstein approach determine the price of the American style derivative whose payoff is given as max[(90 -St,0)]^2

What would be the gain if there is an arbitrage opportunity : Suppose the stock price is $55, after six months, it either goes up by the factor U = 1.3209. What would be the gain if there is an arbitrage opportunity

User Account

All Pages