You purchased a stock for $36 a share, a call option with an exercise price of $35 and a premium of $3, and a put option with an exercise price of $35 and a premium of $2. What will be your net profit if you close out all three positions when the stock is selling for $37 a share?
A) -$2
B) $3
C) -$1
D)$2

Question

Quizplus · Accepted Answer

Net profit = ($37 - 36) + Max[$37 - 35, $0] + Max[($35 - 37), $0] - $3 - 2 = -$2

You Purchased a Stock for $36 a Share, a Call