FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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An investor owns Citibank stock at $75.
They want to sell some 3-month out-
of-the-money call options against their
position.
STRIKES
72.50
75
77.50
CALL PRICE
5.60
4.12
2.84
Create a table showing the profit and
loss for underlying trading at 70, 72.5,
75, 77.5, 80 and 82.5 for all the
positions and the option strategy.
Draw an expiry pay-off diagram, using
the prices in the table.
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Transcribed Image Text:An investor owns Citibank stock at $75. They want to sell some 3-month out- of-the-money call options against their position. STRIKES 72.50 75 77.50 CALL PRICE 5.60 4.12 2.84 Create a table showing the profit and loss for underlying trading at 70, 72.5, 75, 77.5, 80 and 82.5 for all the positions and the option strategy. Draw an expiry pay-off diagram, using the prices in the table.
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