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value and Profit of A. buy 2 calls & buy 1 put, same strike price. B. buy 1 calls & buy 2 put, same stike price...

value and Profit of
A. buy 2 calls & buy 1 put, same strike price.
B. buy 1 calls & buy 2 put, same stike price.
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Answer #1
  1. Buy 2 calls & buy 1 put, same strike price.

Buying one call and one put option of same strike price will offset one another and there is no net gain or loss.

But here it is to buy 2 calls & buy 1 put, same strike price.

Therefore,

Value of this strategy will be equal to one call option as one call and one put option will offset one another

Profit from this strategy = Profit on one call option (stock price – strike price) – premium paid for all the three options

  1. Buy 1 call & buy 2 put, same strike prices.

Buying one call and one put option of same strike price will offset one another and there is no net gain or loss.

But here it is to buy 1 call & buy 2 put, same strike prices.

Therefore,

Value of this strategy will be equal to one put option as one call and one put option will offset one another

Profit from this strategy = Profit on one put option (strike price - stock price) – premium paid for all the three options

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