A six month call with a strike price of $60 costs $6. A six month put with a strike price of $40 costs $3. The current stock price is $50. A trader uses the options and stock to create a strategy that requires long 60 shares, short 100 call options, and long 100 put options.
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?
c. What is the breakeven stock price, above which the trader makes a profit?
d. What is the breakeven stock price, below which the trader makes a profit?
Please show work and explain in detail how you arrived at your answers so I can understand it better for both A, B, C and D.