Assume you sell 100 shares of Larson Corporation short at $61. You also buy a 60 call option for $3.5 to protect against the stock price going up.
(A) If the stock ends up at $80, what will be your overall gain or loss?
(B) If the stock ends up at $40, what will be your overall gain or loss?
(C) What is the most you can lose under this short sale-call option plan?
(D) If you have an unprotected short sale position (no call option), what is the most you could lose?