Homework Answers
The maximum payoff that a long put option can have is the strike price. This happens when the stock price goes to zero.
There is no maximum payoff for a long call option. Theoretically, the stock price can go up to any value. As the stock price keeps going up, the payoff of the long call option keeps going up. There is no limit.
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What is the maximum payoff that a long put option can have? How about a long...
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A trader creates a long strangle with put options with a strike price of $160 per...
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You own a put option on Ford stock with a strike price of $14. The option will expire in exactly six months' time. When you bought the put, its cost to you was $2. The option will expire in exacly six months' time. a. If the stock is trading at $10 in six months, what will be the payoff of the put? What will be the profit of the put? b. If the stock is trading at $25 in six...
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