OPTION ANALYSIS & FINANCIAL DERIVATIVES
HOMEWORK ASSIGNMENT
Construct a Profit Diagram for each of the following classic option strategies (I will do this in a spreadsheet). What is the investor attempting to accomplish with each position?
Protective Put
Buy Stock S=$50
Buy Put p=$2, E=$50
Covered Call
Buy Stock S=$50
Write Call c=$2, E=$55
Bull Spread
S=$50
Buy at-the-money Call c=$4, E=$50
Write out-of-the-money Call c=$2, E=$55