The stock price of BAC is currently $150 and a put option with strike price of $150 is $10. A trader goes long 300 shares of BAC stock and long 3 contracts of the put options with strike price of $150. a. What is the maximum potential loss for the trader?[x](sample answer: $105.75) b. When the stock price is $161 on the expiration, what is the trader’s net profit?[y]
The stock price of BAC is currently $150 and a put option with strike price of $150 is $10. A trader goes long 300 shares of BAC stock and long 3 contracts of the put options with strike price of $150. a. What is the maximum potential loss for the trader?[x](sample answer: $105.75) b. When the stock price is $161 on the expiration, what is the trader’s net profit?[y]
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 2P
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The stock price of BAC is currently $150 and a put option with strike price of $150 is $10. A trader goes long 300 shares of BAC stock and long 3 contracts of the put options with strike price of $150.
a. What is the maximum potential loss for the trader?[x](sample answer: $105.75)
b. When the stock price is $161 on the expiration, what is the trader’s net profit?[y](sample answer: $105.75)
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