Question

You establish a straddle on Walmart using September call and put options with a strike price of $94. The call premium is $7.70 and the put premium is $8.45. What will be your profit or loss if Walmart is selling for $99 in September?

At what stock prices will you break even on the straddle?

Answer 1

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NPV, IRR, PBP,OCFINDEX - Microsoft Excel (Product Activation Failed) View Add-Ins File Home Insert Page Layout Formulas Data Review - 2x % Cut 11 A = = = V General A A Wrap Text Merge Merge & Center Center Σ AutoSum : A Fill 2 Sort & m Find & SF $ - % % 4:0 .00 8.9 Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles 2 Clear Calibri E Copy Paste Format Painter B I Clipboard FO231 - FG FH Filter Editing Select Alignment Number Cells U - D Font for FL FJ F K FM EN FO FPFO FR FS FT 216 217 strike price = 94 PREMIUM PAID: call premium = 7.70, put premium = 8.45 218 219 220 total loss stock price call payoff put payoff total payoff total premium paid 5 16.15 221 ans 1 99 -11.15 [16.15-5] 222 223 224 note As we have bought call, price on expiry is higher than strike price, payoff = 99-94 =5 As we have purchased put, and price on expiry is higher than strike price, payoff = 94-99 =-ve = 0 ans 2 Lower Breakeven Point = Upper Breakeven Point = 94 - 16.15 = 94 + 16.15 = 77.85 110.15 225 226 227 228 229 230 231 232 233 234 H O FCFARM, MSI,confidenceINDEX CURRENCY LOAN CROSS OVER HEDGING MONEY MARKET GM HPR AM TAX GROWTH SUST CF CASH FLOW STATW ferences PREF AND DIV POLICYI BOU 130% Rea 0 DO 4 * 4 OENG 11-09-2019