What is the total payoff on two options in your portfolio

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Consider the following option portfolio. You write a July 2009 expiration call option on IBM with exercise price of $100. You also write a July 2009 expiration put option on IBM with exercise price of $95.

1. If IBM stock is $97 on the expiration date (third Friday of July 2009), what is the total payoff on the two options in your portfolio?

A) 0 B) 2 C) 3 D) 5

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2. If the July 2009 expiration call option price is $7.35 and the July 2009 expiration put option price is $9.00. And the IBM stock is $105 on the expiration date (third Friday of July 2009), what is the total profit/loss on the two options in your portfolio?

A) 7.35 B) 16.35 C) 21.35 D) 11.35 E) None of the Above  

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Reference no: EM132066935

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