A Strategy Consists of Longing a Put on the Market

question 9

Multiple Choice

A strategy consists of longing a put on the market index with a strike of 830 and shorting a call option on the market index with a strike price of 830.The put premium is $18.00 and the call premium is $44.00.Interest rates are 0.5% per month.Determine the net profit or loss if the index price at expiration is $830 (in 6 months) .

• A) $0
• B) $23.67 loss
• C) $26.79 gain
• D) $28.50 gain

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