Draw a profit diagram for each of the following combined option positions: Combi

Question

Draw a profit diagram for each of the following combined option positions:

Combination 1:

Short 1 call with an exercise price of $50 with a call price of $2, and

Long 1 call with an exercise price of $55 with a call price of $1.

Combination 2:

Long 1 call with an exercise price of $50 with a call price of $2, and

Long 1 put with an exercise price of $50 with a put price of $1.

Combination 3:

Short 1 put with an exercise price of $50 and an put price of $1, and

Long 1 call with an exercise price of $50 and a call price of $2.

Explanation / Answer

Draw a profit diagram for each of the following combined option positions: Combi

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