You buy one Home Depot June 60 call contract and one June 60 put contract. The call premium is $5 and the put premium is $3.
A. $52.
B. $60.
C. $68.
D. either $52 or $68.
E. None of the options are correct.
D. either $52 or $68.
Call: $60 + ( $5) + $3 = $68 (break even); Put: $3 + $60 + ( $5) = $52 (break even); thus, if price increases above $68 or decreases below $52, a profit is realized.
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