When implementing straddle and inverse straddle position

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Reference no: EM132065589

Assuming the strike price is $60, stock price is $60, the risk free rate is 2.45%, it is a 6 month option, and volatility is 26%. Determine the price of the call option. Then determine the price of a put option with the same parameters using the call – put parity theorem. Determine the price of implementing a long straddle and a short straddle position. Please explain what will be the profit / loss when the underlying stock has a price of $50 for the long and short straddle position. What will be the profit / loss when the underlying stock has a price of $70 for the long / short position? Explain what the speculative position is when implementing a straddle and inverse straddle position.

Reference no: EM132065589

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