Series 7 - General Securities Representative Exam

Preview Mode

A trader bought a January 75 call for 3.00. At the same time he bought a January 65 Put for 2.50. Which of the following stock prices at expiration means that the trader made a profit?

$58.40
A
$61.80
B
$78
C
$70
D

Explanations

He paid 5.50 in premium by purchasing this strangle. He needs the price to be over $80.50 OR below $59.50 upon expiration to make a profit.

Pricing