Question

Sugar Land stock is selling for $47 and has the following six-month options outstanding.

	Strike Price	Option Market Price
Call Option	$45	$4
Call option	$50	$1

e. Estimate profit and loss if the investor buys the stock and sells the call with the $50 strike price if at the expiration stock price are: $30, $50, $55, and $65 . What is the breakeven stock price at expiration for investor to make profits?

f. Estimate profit and loss if the investor buys the stock and sells the call with the $45 strike price if at the expiration stock price are: $30, $50, $55, and $65. What is the breakeven stock price at expiration for investor to make profits?

Answer 1