Suppose a financial manager buys call options on 45,000 barrels of oil with an exercise price of $30 per barrel. She simultaneously sells a put option on 45,000 barrels of oil with the same exercise price of $30 per barrel. Her net profit per barrel is _____ if the price per barrel is $29 and _____ if the price per barrel is $35.
A)-$5; $1
B)-$1; $0
C)$0; -$1
D)$0; $1
E)-$1; $5

Question

Quizplus · Accepted Answer

At $29: Value of call option position = $0; Value of put option position = -$1; Total = -$1At $35: Value of call option position = $5; Value of put option position = $0; Total = $5

Suppose a Financial Manager Buys Call Options on 45,000 Barrels