04 Jun Question 1. Assume you own 100 shares of AAPL stock (at $107.9
Question
1. Assume you own 100 shares of AAPL stock (at $107.93 per share). Use the February 110 put to develop a protective put strategy. How will this strategy protect your position in AAPL if the stock price falls to $90? What if the price rises to $130? Calculate the net profit generated by the stock and the put at these prices and assuming they occur at the time of the option’s expiration.
2. Focus on the January 120 call. Suppose you bought this call at the price indicated. How high must AAPL’s price rise at expiration to break even on this option?
3. Create a strangle by buying the February 120 call and the February 110 put.What’s the maximum loss for this position and what range of stock prices will produce it? Where will you break even? Why would an investor establish a position like this?
4. Now, look at the January 120 put. Provide a table showing the profit at expiration to a put buyer across a range of stock prices.
The following prices come from the CBOE listings on D
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