Question

An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a strike price of $40. What is the maximum profit for this position

Answer 1

Answer: $2

Step-by-step explanation:

From the question, we are informed that an investor purchases a stock for $38 and a put for $.50 with a strike price of $35 and that the investor sells a call for $.50 with a strike price of $40.

The maximum profit for this position will be the purchase price of the stock deducted from the strike price of call option. This will be:

= $40 - $38

= $2