Question

You establish a straddle on Walmart using September call and put options with a strike price of $64. The call premium is $4.95 and the put premium is $5.70 a. What is the most you can lose on this position? (Input the amount as positive value. Round your answer to 2 decimal places.) Maximum loss b. What will be your profit or loss if Walmart is selling for $72 in September? (Input the amount as positive value. Round your answer to 2 decimal places.) (Click to select)of$ c. At what stock prices will you break even on the straddle? (Input your answers from highest to lowest to receive credit for your answers. Round your answe Break even prices and $

Answer 1

1.
Maximum Loss=4.95+5.70=10.65

2.
=MAX(64-72,0)+MAX(72-64,0)-4.95-5.70
=-2.65

Loss of 2.65

3.
Breakeven 1=64-4.95-5.70=53.35

Breakeven 2=64+4.95+5.70=74.65