espoir
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Hi,
I don't understand this scenario.
S=44 C(K=40)=5.5 P(K=40)=1.0 1.buy stock 2.sell call 3.buy put
(Answer) Net debit=44-5.5+1.0=39.5 (assume no commission) Then think about 3 possible scenario.
S*:stock price at premium I.S*=26 1.S*=26 2.C*=0 3.P*=14 Therefore, revenue=40
II.S*=40 1.S*=40 2.C*=0 3.P*=0 Therefore, revenue=40
III.S*=51 1.S*=51 2.C*=0 3.P*=-11 Therefore, revenue=40
My question is... Where did S*, 26, 40 and 51 come from?????
Posts: 2 | Registered: Jan 2009
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