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 $60. The call premium is $4.75 and the put premium is $5.50. a. What is the most you can lose on this position? (Input the amount as positive value. Round your answer to 2 decimal places.) Maximum loss            $ b. What will be your profit or loss if Walmart is selling for $69 in September? (Input the amount as positive value. Round your answer to 2 decimal places.) of $ c. 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.) Break even prices            $ and $

Explanation / Answer

a. most money to be lost = 4.75 + 5.50 = 10.25

b. loss =10.25 - (69 + 60) = 1.25

c. break even prices = 60 + 10.25 and 60-10.25 = 70.25 and 49.75

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