(Solution Download) The price of DHM stock is 192 and the following


The price of DHM stock is $192 and the following call and put options are actively traded.

You decide to analyze the following strategies:
Buy the calls to buy the stock at $180 and $210 and sell the puts to sell the stock at $190 and $200
Buy the calls at $180 and $210 and sell the calls at $190 and $200
Buy the calls at $180 and $210 and buy the puts at $190 and $200
Buy the call at $180 and the put at $210 and sell the call at $190 and the put at $200
Buy the put at $180 and the call at $210 and sell the put at $190 and the call at $200.
a) What is the cash inflow or outflow resulting from each strategy?
b) What is the profit or loss on each position at the options' expiration if the price of the stock is $180, $190, $200, or $210?
c) If you anticipate that the price of the stock will rise, which strategy is best compared to buying the stock?
d) If you anticipate that the price of the stock will be stable and sell for $192 at the options' expiration, which strategy or strategies generates a positive return?

 







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