Question

Draw the payoff diagram for owning (buying) a call and a put option with same strike...

Draw the payoff diagram for owning (buying) a call and a put option with same strike price X.

List some examples and explain it.

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Answer #1
Position Buy
Option Type call
Exercise Price $40.00
Option Price $5.00
Stock Price At Maturity $0.00 $8.00 $16.00 $24.00 $32.00 $40.00 $48.00 $56.00 $64.00 $72.00 $80.00
Option Payoff $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $8.00 $16.00 $24.00 $32.00 $40.00
Option Profit -$5.00 -$5.00 -$5.00 -$5.00 -$5.00 -$5.00 $3.00 $11.00 $19.00 $27.00 $35.00

Position Buy
Option Type Put
Exercise Price $40.00
Option Price $5.00
Stock Price At Maturity $0.00 $8.00 $16.00 $24.00 $32.00 $40.00 $48.00 $56.00 $64.00 $72.00 $80.00
Option Payoff $40.00 $32.00 $24.00 $16.00 $8.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Option Profit $35.00 $27.00 $19.00 $11.00 $3.00 -$5.00 -$5.00 -$5.00 -$5.00 -$5.00 -$5.00

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