Suppose a financial manager buys call options on 45,000 barrels of oil with an exercise price of $31 per barrel.She simultaneously sells a put option on 45,000 barrels of oil with the same exercise price of $31 per barrel.Her net profit per barrel is _____ if the price per barrel is $29 and _____ if the price per barrel is $35.
A)-$4; $2
B)-$2; $0
C)$0; -$2
D)$0; $2
E)-$2; $4

Question

Quizplus · Accepted Answer

At $29: Value of call option position = $0; Value of put option position = -$2; Total = -$2 At $35: Value of call option position = $4; Value of put option position = $0; Total = $4

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