An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a s

Question

bogdanovich [222]

2 years ago

9

An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a s

trike price of $40. What is the maximum profit for this position

Business

1 answer:

Nuetrik [128] · Answer 1 · 2022-08-04T07:21:18+03:00

Answer: $2

Explanation:

From the question, we are informed that an investor purchases a stock for $38 and a put for $.50 with a strike price of $35 and that the investor sells a call for $.50 with a strike price of $40.

The maximum profit for this position will be the purchase price of the stock deducted from the strike price of call option. This will be:

= $40 - $38

= $2