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Construct a profit diagram for classic option strategies

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Reference no: EM131175197

OPTION ANALYSIS & FINANCIAL DERIVATIVES

HOMEWORK ASSIGNMENT

Construct a Profit Diagram for each of the following classic option strategies (I will do this in a spreadsheet). What is the investor attempting to accomplish with each position?

Protective Put

Buy Stock S=$50
Buy Put p=$2, E=$50

Covered Call

Buy Stock S=$50
Write Call c=$2, E=$55

Bull Spread

S=$50
Buy at-the-money Call c=$4, E=$50
Write out-of-the-money Call c=$2, E=$55

Reference no: EM131175197

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