What is the profit or loss per share from buying the stock

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Reference no: EM132012700

Suppose you are given the following information:

Price of the GAP Inc stock: $62

Strike Price of a 1 year call option: $60

Market Price (premium) of the call option: $6

Strike Price of a 1 year put option: $60

Market Price (premium) of the put option: $2

(a) What is the maximum amount the buyer of the call option can gain?

(b) What is the maximum amount the seller of the call option can lose?

(c) What is the maximum amount the buyer of the put option can lose? Suppose at the expiration date (after 1 year has elapsed), the price of the stock is at $79

(d) What is the profit(loss) per share from buying the stock?

(e) What is the profit (loss) per share from buying a put option contract?

Reference no: EM132012700

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