An investor purchases a stock for $57 and a put option for $.85 with a strike pr

Question

An investor purchases a stock for $57 and a put option for $.85 with a strike price of $52. The investor also sells a call option for $.85 with a strike price of $61. What is the maximum profit and loss for this position? (Loss amount should be indicated by a minus sign. Round your answers to 2 decimal places.)

An investor purchases a stock for $57 and a put option for $.85 with a strike price of $52. The investor also sells a call option for $.85 with a strike price of $61. What is the maximum profit and loss for this position? (Loss amount should be indicated by a minus sign. Round your answers to 2 decimal places.)

Explanation / Answer

Maximum profit = (61-57) + 0.85 - 0.85

Maximum profit = $ 4

Maximum Loss = (52-57) + 0.85 - 0.85

Maximum Loss = $ - 5

Answer

Maximum profit = $ 4

Maximum Loss = $ - 5

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