Straddle on Apple Assignment
February 18th, 2020
The following information is used for Question #3-#5;
You want to establish a straddle on Apple. The available call premium is $5 and put premium is $6. Suppose X=$100 for both the call and the put.
3. What is the maximum profit of this strategy? A. $50 B. $39 C. $11 D. Unlimited E. None above
4. What is the minimum payoff of this strategy? A. $50 B. $39 C. $11 D. Unlimited E. None above
5. What is the expectation of the investors who use this strategy?
A. Underlying price will increase only
B. Underlying price will decrease only
C. Underlying price volatility is going to be large
D. Underlying price volatility is going to be small
E. None above. Get Finance homework help today