What transactions would undertake

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Problem 1: Suppose you have received 1000 shares of the company you work at from your employer as part of your compensation package. The current share price is 50. You would like to defer selling the stock for one year for tax reasons. However, you are concerned about the risk involved in postponing the sale. You would like to ensure that the proceeds from the sale of the stock at the end of 1 year is in the range of 45,000 - 55,000. You can buy or write European call and put options for 1-year maturity for any strike price. What transactions would you undertake? Briefly explain how the transactions achieve your objective.

Reference no: EM132958357

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