You sold a call option at strike 105 for a price of $3 and sold a put option at strike 95 for a price of $2,both options with the same maturity.In what range of stock prices at maturity will you make money or not lose (on your net payoff)?

Question

Quizplus · Accepted Answer

The net payoff is 5 - max (0,S_T - 105)- max(0,95 - S_T).You can check that in the range 90-110,the value of the net payoff is non-negative.

You Sold a Call Option at Strike 105 for a Price