A Put and a Call Have the Following Terms

question 22

Essay

A put and a call have the following terms:

Call: strike price             $50
             expiration date   six months
Put:  strike price             $50
             expiration date   six months

The price of the stock is currently $55. The price of the call and put are, respectively, $9 and $1. What will be the profit from buying the call or buying the put if, after six months, the price of the stock is $40, $50, or $60?

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Definitions:

Output Stream

A channel that facilitates the transfer of data to a target location, such as a document, array, network connection, or different software.

Append Data

The process of adding new elements or information to the end of an existing data structure.

Input Stream

A stream that reads data from a source, commonly used in programming for data input operations.

BufferedReader

A Java class used to read text from an input stream, buffering characters to provide efficient reading of characters, arrays, and lines.