Consider an asset with a current spot price of $50. You sell a one year 10% out of the money call on the asset with a pr

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answerhappygod
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Consider an asset with a current spot price of $50. You sell a one year 10% out of the money call on the asset with a pr

Post by answerhappygod »

Consider an asset with a current spot price of $50.
You sell a one year 10% out of the money call on the asset with
a premium of $3.
You also buy a one year buy a 10% out of the money put on the
asset with a premium of $4.
Draw the payoff diagram for this structure (the call combined
with the put). At what prices will you breakeven after accounting
for the premium?
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