Suppose the price of an asset is $50 per unit. A Call option on the asset with a strike price of $55 is trading in the market at a premium of $2, a Put option on the asset with a strike price of $45 is trading in the market at a premium of $8, and a forward contract on the asset is trading at a price of $52. All derivatives contracts are on 1 unit of the asset and all expire the same day.
If you buy 1 unit of the asset, buy 1 call option contract, sell 1 put option contract and enter into a long position in 1 forward contract, what is the P/L on each of these four positions in the future when the derivatives contracts all expire and the price of the asset is $54 per unit?
Get Answers For Free
Most questions answered within 1 hours.