Which the strategies will be profitable

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Reference no: EM132038365

A straddle is defined as buying a call and a put on the same security (with the same exercise price and expiration date). You plan to recommend the following options strategies to your clients. As part of your analysis calculate the stock price or prices on expiration above which or below which the strategies will be profitable (ignore dividends and interest). The current stock price is $68.00.

(a) Buy a straddle with an exercise price of 70, where each option costs $5.00.

(b) Sell a straddle with an exercise price of 70, where each option costs $5.00.

Reference no: EM132038365

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