Risk-free strategy to make money in market, Finance Basics

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Risk-free strategy to make money in market

The following prices are observed in the market for an option: (all options are on the same underlying with same maturity time)

Stock trades at S0 = 100

A straddle with K=100 trades at 7.9

A strip with K=100 trades at 12.1

A strap with K=100 trades at 11.6

A strangle with K1=95 and K2=105 trades at 5.0

A butterfly spread with K1=95, K=100 and K2=105 trades at 2.1

Describe a risk-free strategy to make money in this market (only trading the above instruments)

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Finance Basics: Risk-free strategy to make money in market

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Finance Basics: Risk-free strategy to make money in market

Reference No:- TGS041498

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Which growth rate is expected for company stock price

Q : Ethical concept of independence means

Q : Determining stock expected total yield

Q : Objectives of financial reporting

Q : Risk-free strategy to make money in market

Q : Determining the hedging cost

Q : Retained earnings at the starting of the year

Q : Expenditures related to the patent

Q : Draw a graph to analyse the effects

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Risk-free strategy to make money in market

Reference No:- TGS041498

Recent Questions Asked Finance Basics

Q : Which growth rate is expected for company stock price

Q : Ethical concept of independence means

Q : Determining stock expected total yield

Q : Objectives of financial reporting

Q : Risk-free strategy to make money in market

Q : Determining the hedging cost

Q : Retained earnings at the starting of the year

Q : Expenditures related to the patent

Q : Draw a graph to analyse the effects

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