A one-year call option on a stock with strike price of 45, Financial Management

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A one-year call option on a stock with strike price of 45

A one-year call option on a stock with strike price of $45 cost $5 and a one-year put option on a stock with strike price of $35 cost $3. A trader shorts two put options and shorts one call option.

a) What is the breakeven stock price, below which the trader will lose money?

b) What is the breakeven stock price, above which the trader will lose money?

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Financial Management: A one-year call option on a stock with strike price of 45

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Financial Management: A one-year call option on a stock with strike price of 45

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