Recently You Bought a Call and a Put Option on a Stock

question 41

Multiple Choice

Recently you bought a call and a put option on a stock with a common exercise price of $75.The call premium was $5 and the put premium was $3.You will make money from this position if the stock price is:

• A)greater than $75, but less than $78.
• B)greater than $75, but less than $80.
• C)greater than $72, but less than $75.
• D)less than $67, or greater than $83.

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Definitions:

Causally Related

Refers to entities or events that have a cause-and-effect correlation with one another.

Causality

The relation between causes and effects, often considered fundamental to the understanding and analysis of phenomena in various fields, including philosophy and science.

Conclusion

The final part of something, typically a process, argument, or story, or the judgment or decision reached by reasoning.

False Alternative

A logical fallacy that occurs when an argument unjustly limits the options to two when there are more possibilities.