Case:As a speculative investor, you can make profits by combining two option trades. Assume that you expect low volatility for the Delivery Hero share (currently standing at € 104.50). Combine two of the following four possible option trades, all related to Delivery Hero stock:- (1.) Long Call or (2.) Short Call as of 16.12.22, strike price € 105, option price € 5- (3.) Long Put or (4.) Short Put as of 16.12.22, strike price € 104, option price € 4. a) Which two of these four option trades are to be chosen?b) What is the maximum profit of the speculative investor in the example you have chosen?c) At which price or in which price range of the Delivery Hero share is the maximum profit achieved?d) In which price range is the speculative investor at all in the profit zone (i.e. where are the break-even points)?
Case:
As a speculative investor, you can make profits by combining two option trades. Assume that you expect low volatility for the Delivery Hero share (currently standing at € 104.50). Combine two of the following four possible option trades, all related to Delivery Hero stock:
- (1.) Long Call or (2.) Short Call as of 16.12.22, strike price € 105, option price € 5
- (3.) Long Put or (4.) Short Put as of 16.12.22, strike price € 104, option price € 4.
a) Which two of these four option trades are to be chosen?
b) What is the maximum profit of the speculative investor in the example you have chosen?
c) At which price or in which price range of the Delivery Hero share is the maximum profit achieved?
d) In which price range is the speculative investor at all in the profit zone (i.e. where are the break-even points)?
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