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What is the maximum potential profit of strategy

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Suppose you purchase one XYZ August 100 call contract at $6.5 and write one XYZ August 110 call contract at $0.5.

a) What is the maximum potential profit of your strategy?

b) If, at expiration, the price of a share of XYZ stock is $105, what would be your profit?

c) What is the maximum loss you could suffer from your strategy?

d) What is the lowest stock price at which you can break even? 2. Consider a one-year maturity call option and a one-year put option on the same stock, both with striking price $100. If the risk-free rate is 5%, the stock price is $103, and the put sells for $7.50, what should be the price of the call?

Reference no: EM132693349

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