You establish a straddle on Walmart using September call and put options with a

Question

You establish a straddle on Walmart using September call and put options with a strike price of $59. The call premium is $4.70 and the put premium is $5.45.

What is the most you can lose on this position? (Input the amount as positive value. Round your answer to 2 decimal places.)

What will be your profit or loss if Walmart is selling for $67 in September? (Input the amount as positive value. Round your answer to 2 decimal places.)

At what stock prices will you break even on the straddle? (Input your answers from highest to lowest to receive credit for your answers. Round your answers to 2 decimal places.)

You establish a straddle on Walmart using September call and put options with a strike price of $59. The call premium is $4.70 and the put premium is $5.45.

Explanation / Answer

a) For the investor holding a call option, the maximum loss is the premium paid. So it is $ 4.70 in this case.

b) at $ 67 price the profit would be 67 - 59.- 4.70

= $3.3

c) at a price of $ 63.70 and $ 53.55

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