You establish a straddle on Walmart using September call and put options with a

Question

You establish a straddle on Walmart using September call and put options with a strike price of $64. The call premium is $4.95 and the put premium is $5.70.

What is the most you can lose on this position? (Input the amount as positive value. Round your answer to 2 decimal places.)

What will be your profit or loss if Walmart is selling for $72 in September? (Input the amount as positive value. Round your answer to 2 decimal places.)

At what stock prices will you break even on the straddle? (Input your answers from highest to lowest to receive credit for your answers. Round your answers to 2 decimal places.)

You establish a straddle on Walmart using September call and put options with a strike price of $64. The call premium is $4.95 and the put premium is $5.70.

Explanation / Answer

Answer:a Maximum loss=$4.95+$5.70=$10.65

Answer:b Profit / loss = 72 – 64 – 10.65 = -2.65

Answer:c There are two break even prices: 74.65 (64+10.65) and 53.35 (64-10.65).

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